Good news for "short sale" owners

At the end of the year, the President signed in new legislation....I have to admit with all the news is has been hard to figure out what has been written into law. I decided over the next few posts that I would share what I have learned in hopes it will help those who currently face the "short sale" prospect.

A "short sale" is the effort by a Realtor to sell someone's property who is facing foreclosure. Prior to the bank or mortgage company auctioning the property, the property is marketed, and the Realtor works with the mortgagor to accept less than what is owed on the property. This remedy is being used a lot nowadays because of the number of adjusting loans and the property values in Orlando not rising to allow for re-financing.

In many cases, the house ends up being sold for $25,000 to $50,000 less than what is owed. In the past, the amount that was forgiven by the bank in the "short sale," but a 1099 was filed, and the amount was attributed as "income."

Yes, it is hard to imagine, but if the loan cannot be paid, how did the government expect them to pay taxes on the forgiven amount? But I digress.

Law was inacted that eliminates the tax until January 1, 2010. The law is retroactive to January 1, 2007.

If you have any questions about short sales, or the options you can have with a mortgage company when you cannot continue to make the payments, please e-mail me at www.audreybutlerhomes.com or contact me at the numbers provided.

How foreclosures affect your neighborhood

I had a buyer ask me the other day about a problem in their current neighborhood. The house next door is going into foreclosure. Unfortunately, the husband and wife divorced, the wife got the house, and she could not keep up the payments.

Foreclosures are more of a concern in these recent months, due to sub prime loans. My mother said that in our hometown paper in Georgia there are pages of foreclosure notices. The big question: how does it affect your home's value?

I did some research to see what the experts say. The response: the price of your home may decrease by 1.5% if there is a foreclosure in your neighborhood.

How do you decrease the risk? If you are friends with your neighbor, and they express concern about making their house payment, encourage them to seek out a Realtor. Make sure they are trained on how to handle families in this crisis. Ask them if they are familiar with "short sales." If they are not familiar with the term, ask them to refer you to someone in their brokerage that is familiar with them. I can provide assistance in locating someone who can help them.

When this problem strikes, it is easy for someone to want to stick their head in the sand. This is not the time for that particular action. Quick action must be taken, to insure the homeowner, the bank, and the neighborhood is protected.