Brian Patnode

Short-Sale a complex process that entails calculating, vigorous marketing, and hard negotiations. Realtors are required to take on a huge load of work based on the hopes of a successful short-sale approval.

Realtors Goal: A bank will not foreclose on a property in this economy due the decreasing values of homes. Banks have to cover all the months of delinquent payments (9+ months of Principle, Interest, Taxes, and Insurance); they also have to pay for attorneys, hired employees, paperwork, a realtor to clean up and sell the property all over again, and much more.

The Realtor's goal to convey to the bank:
1. Short-sale will save money & time compared to a foreclosure.
2. There is a lender approved buyer ready to purchase the property at fair market value.
3. The seller is unfit to maintain payments for the property.

If it was not for the poor real-estate market we are in today; a home-buyer would have to take a financial cost to selling their home for the losses in value! Can you imagine having to pay 100 or 200 or $300,000+ just to sell a home!?
Short-Sale Pros:
1. A homes can be sold even if the value is below the owing balance.
2. No foreclosure on your record.
3. It is sold at market value for a quick sale.

Short-Sale Cons:
1. Can be a long process between 2-6 months (Sometimes more depending on the property)
2. Seller COULD be taxed for bank's losses if seller cashed out of their equity (Click here for more info) 3. Only available for people who are in distress; not profitable properties.

The reason why a home-seller COULD be taxed on the banks losses is because if the seller liquidated their equity (Cashed-out) and used those funds for personal reasons. That is considered income and the state could possibly tax them for it. (Click here for more info)

The process of a short-sale does not require a home-owner to make payments, in fact a home-seller would typically have to show inconsistent payments towards their mortgage; the goal is to show financial hardship.

Things that show a lender your short-sale worthy.

Inconsistent or non-existent mortgage payments.

Decrease in income or loss of job

Depletion of assets or bank statements

Increasing debt

Lack of equity in your home

Family financial obligations

Medical bills

If you have the ability to show this, you might qualify good luck!

Many Californians have a lot of stresses right now; foreclosures, job layoffs, gas prices, and if our next governor will be sylvestor stellone!? As the saying goes, "the bigger you are, the harder you fall", californians did everything big to say the least.

Californians who have suffered foreclosure, short-sale, deed in leiu of forclosure might have to be taxed at the state level for the losses the bank has suffered. Many homes in california have a lot of cash-out loans which means that the type of loan is a "Recourse Loan". This means a bank is allowed to go after you for amounts that you owe, even after they’ve taken collateral (aka your house)(For more information please click deficiancy judgement)

There are some exceptions, congress passed a law called "Mortgage Debt Releif Act of 2007", it grants up to $2,000,000 in forgivness by federal law and up to $250,000 by state. The only way to qualify for this releif is to prove that the liquidated funds from your equity was used to buy, build, or modify your primary residence.

The two bills SB97 and AB111 would have extended the state bill granting homeowners a break from state taxes, unfortunately the bills never passed congress and efforts are still being done to push a new one.

Luckly we have a federal tax break,

Who here is referring their loans to wholesale brokers anymore? If so, why do you?

Please share your thoughts.

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