The Federal Mortgage Debt Forgiveness Act of 2007 has a key tax break that is set to expire at the end of the year.

The federal Mortgage Forgiveness Debt Relief Act of 2007 and California’s Conformity Act of 2010 are set to expire at the end of this year. Both laws exempt some homeowners from paying income taxes on debt cancellation on a primary residence.

More importantly, as the expiration nears, homeowners are likely to flood the system, increasing inventory, straining bank negotiators and lengthening the approval process.

What does this mean?  If you need to sell your house as a short sale, you better do it by the end of 2012, because if you wait until 2013 the deficiency will be taxed like income.  Results - this could cost you thousands of dollars in taxes!

Example - if you sell your house for $300,000, and you owe $400,000, this would result in a $100,000 loss to the bank (approximately).  And a taxpayer could owe $15,000 to $35,000 in taxes on a $100,000.

Call me right now!

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San Diego Short Sales - Are you thinking about Selling your house as a Short Sale?

Would you like to sell your home fast and for top market Value?  Would you like to Avoid Foreclosure or Bankruptcy?  Would you like to walk away without any debt, no tax consequences or pay no commission through a Real Estate Short Sale?

So, what is a Short Sale?

A short sale is a property (house) that sells for less than the balance owed on its mortgage.  In other words, the homeowner owes more than they can sell it on the open market.

Ten years ago San Diego short sales didn't exist.  Now they are the norm!  Not every property will qualify for a short sale.  This is one of the main reasons you need a Realtor to work for you on your behalf.

A bank must agree to the short sale of a property. Why would they agree?  It is estimated that banks save 25% to 30% on foreclosure costs if a home is sold "short" rather than going to foreclosure.  It's my job to provide a "Short Sale package" to the bank which paints a nice neat picture to persuade the bank to approve a short sale.

You may qualify for the HAFA program (Home Affordable Foreclosure Alternatives)

Unlike conventional short sales, an HAFA short sale completely releases you from your mortgage debt after selling the property. This means you will no longer be responsible for the amount that falls "short" of the amount you still owe. HAFA has a less negative effect on your credit score than foreclosure or conventional short sales.  When you close, HAFA may provide $3,000 in relocation assistance.

You may be eligible for HAFA if you meet all of the following criteria:

1.  You have a documented financial hardship.
2.  You have not purchased a new house within the last 12 months.
3.  Your first mortgage is less than $729,750.
4.  You obtained your mortgage on or before January 1, 2009.

Which Lenders are Participating in HAFA?

1.  Bank of America
2.  Citibank
3.  JP Morgan Chase
4.  GMAC Financial Services
5.  Wachovia
6.  Wells Fargo

Questions?  If your home is upside down, you have a high mortgage payment and you know you're not going to be there long term; why wouldn't you call me to discuss your options?

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