Zaida Patel, Realtor —– Blog Website

The New York Times

Program will pay homeowners to sell at a loss
In an effort to end the foreclosure crisis, the Obama administration has been trying to keep defaulting owners in their homes.  Now it will take a new approach: Paying some of them to leave.

To read the full story, please click here.

According to the California Association of Realtors, Fannie Mae and Freddie Mac are offering financing incentives for buyers of foreclosed homes owned by Fannie and Freddie.  Home buyers have until Oct. 30 to apply for Freddie Mac’s SmartBuy program, which started in July, and offers up to 3.5 percent of a home’s sale price to help cover closing costs.

To qualify, the home must be a principal residence and must be selected from Freddie Mac’s HomeSteps Web site (www.homesteps.com/homeshoppers.htm) for its foreclosed properties. Loans must close by year’s end.  The HomeSteps properties also include two-year warranties on major appliances and electrical, plumbing, and air-conditioning and heating systems.

Fannie Mae’s HomePath program (www.homepath.com) is an ongoing program and offers more incentives than Freddie Mac’s.  Through participating lenders, Fannie will offer mortgages to buyers who make a down payment of 3 percent.  The buyers do not have to secure private mortgage insurance, a common practice with nearly all lenders.  Home buyers also can negotiate for Fannie Mae to offer closing-cost assistance.  Unlike Freddie Mac’s program, Fannie’s assistance level is not capped.  Under the HomePath program, the average participating homeowner has received payments equivalent to 3.75 percent of the loan’s value.

To read the full story, please click here:

http://www.nytimes.com/2009/10/11/realestate/11mort.html?_r=1&ref=realestate

We receive lots of questions about tax liability of short sales and foreclosures.  As real estate brokers we are not licensed to give advice on this topic however we can lead you to the information that may answer your questions.

On December 20, 2007 the Mortgage Forgiveness Debt Relief Act of 2007 was enacted. Usually, debt that is forgiven or cancelled by a lender must be included as income on your tax return and is taxable. The Mortgage Forgiveness Debt Relief Act of 2007 allows you to exclude certain cancelled debt on your principal residence from income.  More information regarding the Mortgage Debt Relief Act can be found on the IRS website below:

http://www.irs.gov/individuals/article/0,,id=179414,00.html

Or the California Association of Realtors, Legal Department has put together an FAQ regarding the taxation of Foreclosures, Deeds in Lieu of Foreclosure, and Short Sales. This is more detailed and specific to California.      For more information, please click here.