short sale seminar bakersfield, ca

8/14/2019 Short Sale Seminar Bakersfield, CA

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Short SalesProudly presented By:

Miguel Garcia

Seminar hosted by:Miguel Garcia

Certified Short Sale ProfessionalElite Real Estate Services


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Discussion Topics

Definition.

Purpose.

Success Factors.

Tax Ramifications.

Process. FAQ.


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Definition

What is a Short Sale? When your lender agrees to discount their payoff to

accommodate the sale of your property. Requirements:

Hardship.

Sale value is less than loans + encumbrances + selling costs.

Delinquent (or defaulted) loan.


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Purpose of a Short Sale Facilitate Sale of Property to avoid foreclosure

Benefits the Lenders by: Reducing the proportion of bad debt for which they are accountable..

Avoiding high foreclosure costs.

Keeps Home Occupied.

Benefits to the Seller / Borrower:

Avoid Foreclosure Better Credit Score. Missed payments: score affected by approx. 30 to 100+ points.

Foreclosure: score affected by approx. 140 to 300 + points.

Save money: stay in home mortgage free during the process..

Its the right thing to do.


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Success Factors:When is a short sale more likely?

Seller can show legitimate hardship.

The property is marketable.

When the most junior lender can receive approx. 20% of theoriginal loan amount.

The same lender holds the primary and secondary mortgages (trustdeeds).

Seller is willing to provide all documentation requested.

When financial application can show insolvency.

There is still ample time (ideally 4+ months) before foreclosure.


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Success Factors:When is a short sale highly unlikely?

No seller hardship can be shown.

Seller is current on all loans and no anticipated missed payments. When seller is in Chapter 7 or Chapter 13 bankruptcy.

When seller has completed a recent refinance with cash out.

When there is insufficient proceeds to pay the most junior lenderapproximately 20% of the original loan amount.

When the seller is unable/unwilling to provide all documentation requested. When liens and/or judgments exist with third parties.

When there is insufficient time prior to foreclosure.


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Tax Ramifications

Note: The following slides and associated audio is aninformal discussion of the tax consequences of a shortsale and not intended to constitute legal advice.

Please seek advice from an Attorney or CPA.


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Tax Ramifications

Definition.

Code #108(a)(1)(b) aka.Section 1401 insolvency exception.

Mortgage Forgiveness Debt Relief Act of 2007.

FAQs.


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Section 1401

Also known as Code 108(a)(1)(B) Insolvent Debtor Clause

Borrower must be insolvent at the time of the Short-Sale

Does NOT include assets such as 401(k)?


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Mortgage Forgiveness DebtRelief Act of 2007

Focuses on debts discharged: Between January 1, 2007 and December 31, 2009.

Additional Protection above Section 1401.


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Acquisition Indebtedness

What was the money used for? Indebtedness used for acquiring, constructing, or

substantially improving a qualified residence

AND

The indebtedness was secured by the residence.


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Refinance Indebtedness

Money must be used to substantially add to theproperty. All the funds.

Real property improvements. Kitchen remodel.

Additional room. Finished basement.

Not for personal property. Furniture etc..


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Process: Timeline (California)

Notice of Default. May be filed 16 days after missed payment.

(however, 90 days is more common)

Publication or Redemption Period. 90 day period after notice of default recorded.

Foreclosure Sale. 21 days after Notice of Trustee Sale

recorded.

Total expected time 6-7 months.


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Process: Navigation Agree on professional representation.

Complete the statement of information. (aka S.I.)

Consult legal and/or tax counsel.

Properly evaluate viability of the short sale.

List the property on the MLS Subject to

short sale lenders approval

Start assembling the short sale submission package.


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Process: Submission Package

Cover letter

Completed financialdisclosure

Hardship letter

Purchase contract

Net sheet or

HUD-1 form

Proof of income for past 2

pay periods Copies of last 2 bank

statements

Copies of last 2 years of full

tax returns Third party authorization

form


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FAQ

Following are the FAQ from the IRS website www.IRS.gov What is the Mortgage Forgiveness Debt Relief Act of 2007?

Exclusion of income from modification of mortgage on yourprinciple residence.

What does it mean for me? Excludes certain canceled debt on your principle residence.
http://www.irs.gov/http://www.irs.gov/


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FAQ (continued)

Does this apply to all forgiven or canceled debts

Only debt used to: Buy

Build

Substantially Improve

Or to refinance debt used for those purposes


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FAQ (continued)

Does this provision apply for the 2007 tax year only?

NO 2007, 2008 and 2009 are covered

Does this apply to debt forgiven on second home, credit card orcar loan

NO only debt associated with principle residence


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FAQ (continued)

Does the non-forgiven debt qualify for exclusion under any

other provision? Maybe

Insolvency exclusion

Title 11 bankruptcy

IRS Form 982 gives instructions

Limit on amount? None for loans less than $2 million for married filing jointly


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Summary

Always check with a Tax Attorney or CPA in your

state first. Qualifications:

Hardship and Insolvent. 100% of Senior Note and 20% of Junior or 80% of

Senior note with no Junior. Exclusions of tax liability with short sales:

Section 1401. Mortgage Forgiveness Debt Relief Act of 2007.

Principal residence. Approved Indebtedness.


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Next Steps

Contact: Miguel Garcia

License# 01736656

Direct: 888-673-0666 ext 1

E-Mail: [email protected]

E-Fax: 661-215-5770
mailto:[email protected]:[email protected]


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Additional Information

For additional information please visit:

http://www.youtube.com/watch?v=646rgfCgyHg

Or visit : http://miguelrgarcia.webs.com/

Thank you and have a happy new year!
http://www.youtube.com/watch?v=646rgfCgyHghttp://miguelrgarcia.webs.com/http://miguelrgarcia.webs.com/http://www.youtube.com/watch?v=646rgfCgyHg

short sale seminar bakersfield, ca

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