We specialize in high end short sales in San Diego. There are no government stimulus programs for homeowners with non conforming loans including jumbo loans or alternative loans such as negative amortization, stated income, and stated asset. Many buyers who purchased luxury homes in CA in 2004-2007 used aggressive loan products to qualify.
I find there are primarily 3 mindsets of upside down homeowners:
* There are emotionally attached homeowners that have lived in their home all of their lives, watched their children grow up, and will do anything to save it including falling for different types of loan modification and legal scams.
* Another set of homeowners see their upside down home as a moral obligation. When they signed their mortgage at closing they made a promise to pay, and they will exhaust all resources to keep that promise. Often times after using up retirement funds and all savings they still end up facing foreclosure.
* The final group of homeowner see their home’s underwater position as a business decision opting to bail, rather than continue to pay into an underperforming asset.
- June 2011 Core Logic indicated that nationally there are 10.9 million homeowners currently upside down and 2.5 million are near a negative equity position. Any change in circumstances within regards to employment, illness, death, or divorce put these homeowners at high risk for default.
- June 2011 Experian reported that 33% of all delinquent mortgages in the 2nd quarter of 2010 were on homes valued at more than 1 million, and 30% of these homeowners earned more than $150,000 a year.
- SB 931, new CA Law SB458, and the Mortgage Forgiveness Debt relief Act protect homeowner’s future income and assets, and are very attractive to strategic defaulters who may have significant income and assets to protect.
- The Mortgage Debt Forgiveness Debt Relief Act expires at the end of 2012. In the event of a short sale, the IRS considers the bank’s loss as income for the homeowner. They will issue you a 1099 for the difference in their loss. As long as the property is your primary residence and the debt is from the original purchase of your home you will not have to pay taxes on the loss. If you refinanced and used ALL of the money for home improvements, then you may be eligible for exclusion of tax liability. If you did a cash out refinance or took a 2nd mortgage or HELOC out for debt consolidation, college education, or other expenses, then you may still be excluded from tax liability through insolvency. Insolvency is calculated by the value of your assets versus all of your debts, including your current mortgage obligations.
- California anti deficiency law SB931 protects homeowners after a successful short sale on the 1st lien. The lender accepts the short sale proceeds as full satisfaction, discharging the remaining balance and cannot pursue you for future deficiency. Your loan does not have to be a purchase money loan and it even qualifies for hard money financing.
- SB 931 does not apply to 2nd or 3rd mortgages or HELOC’s, however new CA law SB458 prohibits deficiency for junior liens after a short sale for primary residences of 1-4 units. Lenders can no longer require a borrower to pay additional compensation in exchange for a short sale waiver of deficiency rights. However the new law does not prohibit a borrower from voluntarily offering a monetary contribution to a lender in hopes of obtaining a short sale approval. Exceptions to this include a lender seeking damages for a homeowner’s waste or fraud, a borrower that transferred ownership into the name of an LLC/corporation or took out the loan at time of origination in the form of an LLC/Corporation, a political subdivision of the state, a lien secured by a bond as specified, or a public utility lien. Additional rules apply if a note is cross-collateralized by more than 1 property.
As San Diego Short Sale Experts we are the best choice for your short sale needs.
As an agent with the CDPE® Designation, I have a strong and unique appreciation of the factors affecting the market, and know that there are options available to you. If you would like to know more about your options, please call me at (760) 212-2717. I am here to help … in any way I can.
Joy Bender CDPE® SFR CIAS RSPS
Short Sale Expert
2121 Newcastle Ave
Cardiff By The Sea, CA 92007
