Did you know that military personnel and federal employees, such as members of the foreign service and employees of the intelligence community, get an extra 12 months to claim the recently expired homebuyer tax credit? According to the IRS, servicemen and women have until April 30, 2011, to sign a binding contract and until June 30, 2011, to close the purchase.
This extension is available to individuals or their spouses who served on qualified official extended-duty service outside the country for at least 90 days between Jan. 1, 2009, and April 20, 2010. In order to qualify, only one spouse needed to be overseas during that timeframe.
In addition to the extension, eligible members of the armed services, intelligence community or foreign service do not have to repay the credit if their home is sold or ceases to be a primary residence within the first three years as a result of orders sending them to a new duty station at least 50 miles away. See the details from IRS.gov below....

 

The Worker, Homeownership and Business Assistance Act of 2009, which was signed into law on Nov. 6, 2009, extends and expands the first-time homebuyer credit allowed by previous Acts. The new law: Extends deadlines for purchasing and closing on a home. Authorizes the credit for long-time homeowners buying a replacement principal residence. Raises the income limitations for homeowners claiming the credit.   Under the new law, an eligible taxpayer must buy, or enter into a binding contract to buy, a principal residence on or before April 30, 2010 and close on the home by June 30, 2010. For qualifying purchases in 2010, taxpayers have the option of claiming the credit on either their 2009 or 2010 return.   For the first time, long-time homeowners who buy a replacement principal residence may also claim a homebuyer credit of up to $6,500 (up to $3,250 for a married individual filing separately). They must have lived  in the same principal residence for any five-consecutive year period during the eight-year period that ended on the date the replacement home is purchased. People with higher incomes can now qualify for the credit. The new law raises the income limits for homes purchased after Nov. 6, 2009. The credit phases out for individual taxpayers with modified adjusted gross income (MAGI) between $125,000 and $145,000 or between $225,000 and $245,000 for joint filers. The existing MAGI phase-outs of $75,000 to $95,000 or $150,000 to $170,000 for joint filers still apply to purchases on or before Nov. 6, 2009. Several new restrictions apply to homes purchased after Nov. 6, 2009. Purchasers must attach a properly executed settlement statement to their return. No credit is available if the purchase price of the home exceeds $800,000. The purchaser must be at least 18 years old on the date of purchase. For a married couple, only one spouse must meet this age requirement. A dependent is not eligible for the credit. The new law gives the IRS broader authority to deny first-time homebuyer credit claims, without having to first audit a taxpayer's return. Known as math error authority, this authority applies, retroactively, to credits claimed on original and amended 2008 returns, as well as to claims yet to be filed. Additionally, there are new benefits for members of the military and certain other federal employees: Members of the military and certain other federal employees serving outside the U.S. have an extra year to buy a principal residence in the U.S. and qualify for the credit. Thus, an eligible taxpayer must buy, or enter into a binding contract to buy, a principal residence on or before April 30, 2011. If a binding contract is entered into by that date, the taxpayer has until June 30, 2011, to close on the purchase. Members of the uniformed services, members of the Foreign Service and employees of the intelligence community are eligible for this special rule. It applies to any individual (and, if married, the individual's spouse) who serves on qualified official extended duty service outside of the United States for at least 90 days during the period beginning after Dec. 31, 2008, and ending before May 1, 2010. In many cases, the credit repayment (recapture) requirement is waived for members of the uniformed services, members of the Foreign Service and employees of the intelligence community. This relief applies where a home is sold or stops being the taxpayer's principal residence after Dec. 31, 2008, in connection with government orders received by the individual (or the individual's spouse) for qualified official extended duty service. The credit is still allowable even if this happens during the year of purchase. Qualified official extended duty is any period of extended duty while serving at a place of duty at least 50 miles away from the taxpayer's principal residence (whether inside or outside the U.S.) or while residing under government orders in government quarters. Extended duty is defined as any period of duty pursuant to a call or order to such duty for a period in excess of 90 days or for an indefinite period. Question and Answer Q. Are both spouses required to be overseas for the requisite time period in order to qualify for the 2011 extension to claim the credit?   A. Only one spouse must be overseas on official extended duty for the requisite amount of time for either spouse to be eligible for the 2011 extension of time to purchase a principal residence and claim the credit.

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Make Payments? Walk Away? Short Sale? HELP!!

Trying to get answers from the bank, friends, relatives about what to do? The answers are very hard to find! Where to turn, what is best for my situation?

Here are some of the top questions I am asked by sellers concerning short sales in Ohio:
 
Q. Do I qualify for a short sale?
A. If you cannot make payments or are in imminent danger of not being able to make payments, or if you are insolvent, generally the answer is yes. There is no specific program to qualify for a short sale unless you have an FHA loan (HUD PFS Program) . Each hardship must be evaluated by the lender.
 
Q. Do I have to be late?
A. No! Late last year banks began to change their longstanding policies due to the rising tide of failing loans. Some investors such as Ginnie Mae will require 31 days late, but that means missing one payment. Now there is even an FHA guideline allowing loans immediately after a short sale IF YOU HAVE NOT BEEN LATE ON ANY PAYMENTS (and FHA will make an exception if you have been forced to be late by your investor).
 
Q. Do I have to have my home approved for a short sale by the lender?
A. Not if you have a conventional loan. You will just need a listing agreement, short sale package and purchase agreement, as well as supporting documents. For FHA, you must be approved in the HUD Pre-Foreclosure Sale (PFS) program to determine if you are eligible for a short sale.
 
Q. How do you get paid?
A. You do not pay me. I do not charge a fee beside my commission, and the bank pays that. The bank will also pay taxes, closing costs and some other miscellaneous fees.
 
Q. How long does a short sale take?
A. Generally 90-120 days. Two weeks has happened with easy cash deals, but it is rare. Short sales can be up to a year if complicated by bankruptcies or bank takeovers, such as Countrywide to Bank of America. I have had cash deals close in about 45-60 days. It depends on the lender(s) and the financing.
 
Q. What will a short sale do to my credit score?
A. I have seen as low as a 50 point deduction when a seller keeps payments current, and everywhere in between up to 300 points if payments were severely in default and other bills were late too. So it could be the same as a foreclosure, depending on how other bills were paid/not paid.
 
Q. Why not just walk away?
A. Good question, with a few answers. 1) If you cannot make your payment, a short sale is the best way to honor your word to the best of your current ability. 2) A short sale will be with you for a few years. A foreclosure will be with you forever. Even though it falls off your credit score after 7 years, there are some industries and government agencies that will not hire you if you have a foreclosure in your past. Job applications ask if you have ever had a foreclosure. A short sale does not have these consequences. 3) A short sale allows you to leave a good memory of your name in your neighborhood, rather than an ugly vacant house that devalues the neighboring homes.
 
Q. What are all my options?
A. I recommend that you speak to an attorney or an accounting professional to see what is best for your situation. A short sale is not the best choice for everyone. In some cases, a foreclosure may even be the best choice for you - the answer will depend on your finances, businesses, and comfort level. You may be able to rent your home and keep it until the market improves.
 
Q. Why is the bank willing to do a short sale?
A. Foreclosure is a very lengthy and expensive process for the bank. It can cause the bank to lose up to 60% of the value of the property. The banks usually are happy that an agent was willing to bring an offer and help them make as much money possible on the transaction, opposed to leaving a vacant property that loses value and must be maintained in the process.
 
Q. What if I want to modify my loan and/or keep my house?
A. Please contact your lender for the paperwork needed for a loan modification, and don't delay. If you want to keep your house, pursue that option immediately. There are other options if you wish to keep your house - for example, you may wish to speak to an attorney for options involving bankruptcy. If you want to keep your house, a short sale is not right for you. However, if you are concerned that you may not qualify for a loan modification and would like to avoid foreclosure, a short sale can be attempted at the same time, so no time is lost in case of loan modification failure.
 
Q. Should I stop making payments?
A. NO. I do not recommend that you stop making payments. If you are in foreclosure, generally the lender will not accept partial payments, and if the bank will not accept your payments, please seek legal counsel to do what is best in your particular circumstances. In some cases, the investor on your loan will require you to be 31 days lates to qualify, but do not guess - let the lender tell you what is required and check with multiple sources before stopping payments.
 
Q. Can my wages/savings be garnished by the bank to pay back any deficiency?
A. The loan was secured by the house, so the short answer is no...but the bank does not have to agree to a short sale if they know you have the means to pay back the deficiency. They may ask for a sum of cash, or they may require an unsecured promissory note. Many times we can negotiate the amount and terms of these notes. Again, please speak to an attorney or an accounting professional to determine what is best for you.
 
Q. What happens to the deficiency?
A. While some banks will ask for a promissory note or money at closing, each situation is different, depending on type of loan and investor. I have personally negotiated requests for promissory notes in a number of cases with very positive outcomes. Occasionally if the seller is able to bring money, it has to happen. Generally if the seller does not have money, the bank realizes that and does not ask for money at closing.
 
Q. Will I owe taxes on the shortfall/deficiency?
A. If this was your primary residence, you will be covered under the Mortgage Debt Forgiveness Act of 2007, which has been extended to 2012.
When you file your taxes the year following a short sale, you will fill out form 982 and show your information about your short sale.
 
Great post about FHA Lending Guidelines after a short sale:
http://activerain.com/blogsview/1394035/fha-lending-guidelines-after-a-short-sale-hreu-cdpd-short-sale

Contact an Ohio short sale specialist today to learn what will be the best choice for you.

We don't merely sell real estate.

We increase peace-of-mind. We increase wealth.

We make you happier.

Dawn's cell: 330-990-4236
Email: dawn@dawnsold.com

My cell, 330-990-4236 is where you start if you wish to prevent foreclosure.

A foreclosure stays with you forever. A short sale goes away in a few years.

There is help.

Doing okay? Great! If you know of someone who needs information, please pass on my name.

 

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 Dawn Maloney, REALTOR® | RE/MAX Commitment | (330) 990-4236 | www.DawnSold.com

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