Homebuyer Tax Credit Extension Needed

Team Patereau has helped many first-time buyers purchase homes this year and the Homebuyer Tax Credit has played a major role. We're hoping that our government will find a way to extend that credit. Here's Gino's take on the topic.

Short Sale Basic Training

We're helping a client who is facing a hardship, leading to a probable short sale, so we gathered some basic information. We thought you might benefit from knowing this, too.

Definition: A Short Sale is when a home is sold for less than the amount owed and the lender, after much negotiation, agrees to release the lien and settle for less than the full payment.

Why would a lender accept a Short Sale? A Short Sale is a form of loss mitigation, the lender is presented with a choice between a smaller loss by Short Sale or a larger loss through foreclosure, so accepting the Short Sale mitigates the loss.

The advantage of a Short Sale compared to a foreclosure is that you avoid having a debt discharged due to foreclosure on your credit record. This foreclosure mark can reduce your credit score by over 250 points and keep you from qualifying for a home loan for up to 5 years.

Short sales appear on your credit report as pre-foreclosure in redemption. With a Short Sale you can qualify for a home loan in 24 months.

Qualifications: For a Short Sale to be approved by your lender you must show a hardship. A hardship is defined as a situation that is the result of some extenuating circumstance that forces you into a position where you can no longer afford the mortgage payments. Some examples of a hardship are loss of income, unemployment, divorce, illness and job transfer.

Lenders will also allow a short sale of an investment property. Some examples of hardship include the amount of rent charged does not cover the mortgage payment and related expenses and you cannot afford to pay out-of-pocket to make up the difference. You are unable to rent the property at a price that covers all expenses. You cannot afford to fix damage to the property that keeps you from renting it out.

Timing for your next purchase: Fannie Mae's new policies for manually underwritten loans related to the time period that must elapse before borrowers can demonstrate they have reestablished an acceptable credit history after the occurrence of a short sale or foreclosure.

Short Sale - 2-year time period from completion date.

Additional Requirements: None
Note: No exceptions are permitted to the 2-year time period

Foreclosure - 5-year time period from completion date.

Additional requirements that apply after 5 years up to 7 years following completion date:

• The purchase of a principal residence is permitted with a minimum 10 percent down payment and minimum credit score of 680.
• Purchase of a second home or investment property is not permitted.

Deed-in-Lieu of Foreclosure - 4-year time period from completion date (date deed-in-lieu executed)
Additional requirements that apply after 4 years up to 7 years following completion date:

• Borrower may purchase a property secured by a principal residence, second home, or investment property with the greater of 10 percent minimum down payment or the minimum down payment required for the transaction.

Tax Considerations: On December 20, 2007 President Bush Signed H.R. 3648, The Mortgage Forgiveness Debt Relief Act of 2007.

The law applies to primary residences only and takes effect from January 1, 2007 through December 31, 2012. It provides relief to home owners by shielding them from the additional burden of potential federal income tax on any amount written off or forgiven by their lender in case of foreclosure or short sale. Consultation with an experienced tax professional to see how the law applies in your circumstance is advisable.

If you would like more information click here to be taken to IRS Guidance regarding The Mortgage Forgiveness Debt Relief Act of 2007

Getting Started: The first thing we need to do is evaluate your situation, which includes a conference call with your lender to understand your loan terms and current status. Only after discussions with both you and your lender can we determine if a Short Sale is the best solution.

If a Short Sale is the best solution for you, we will begin the process. A Comparative Market Analysis (CMA) will be done and a marketing strategy will be developed.

Short Sales normally take at least 90 days to complete. Lender approval will take up to 60 days from the time an offer is submitted. Once approved 30-45 days will be necessary to close escrow.

Charges: Real Estate commissions are paid out of the sale proceeds. Your lender has final approval as to the amount of commissions that will be paid. There are no additional costs, fees or charges because the transaction is a Short Sale.

"Foreclosure" is not always a Bad Word

This week's message from Gino, Intero's CEO, is that while foreclosures are not something we think of as a good thing, it turns out there is an upside. Read the full article.

Gilroy Today Magazine - Fall 2009

Here it is - the long-awaited new issue of Gilroy Today. This is the Fall 2009 issue, and it is the most beautifully done of all of the beautifully done issues. Take a look...

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Another GREAT job J. Chris & Larry!

Financing Woes in Today's Transactions

John Thompson, Intero Vice President, had some trouble with a recent transaction that many real estate agents, as well as home buyers are experiencing. Read all about it here.

Economic & Real Estate Forecast

Carol Rodoni, Bamboo Consulting, came to Intero Real Estate to deliver the news, good and bad, about the economy and real estate. She dynamic and interesting, and her talk was full of really sensible information. This video is the first 10 minutes, the rest of the hour is available in 10 minute segments on YouTube. Worth your time!

Positive Signs for Local Real Estate Industry

"Good news this week from mortgage giant Freddie Mac could be a positive sign for the real estate industry, and for the US Economy as a whole," states Gino Blefari, President & CEO of Intero Real Estate.

Read the details here...

Another Gilroy Pure-Gold Asset

The Gilroy Chamber of Commerce publishes an almost-monthly newspaper publication, The Gilroy Focus. Great publication! Great organization! If you're not a member, business or individual, you should be.

Open publication

The Chamber is now on Facebook and Twitter. Cooooooool!

TeamPatereau Newsletter

We have a monthly newsletter. Here's a copy, but if you want on the snail mail list, let us know!

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New Regulation Regarding License Numbers

Within the last several months, after the California Department of Real Estate issued its latest regulation regarding the placement of DRE license numbers on certain solicitation materials.

There has been a great deal of confusion regarding whether or not the DRE# is also required on listing signs, as well as open house signs. We contacted the Department of Real Estate, located in Sacramento and asked them to provide us with the correct language in this regulation. And here is what they said…

DRE LICESNSE NUMBER MUST BE ON SOLICITATION MATERIALS

The California Department of Real Estate (DRE) has recently adopted a new regulation clarifying the law that requires DRE license numbers on business cards and all other solicitation materials intended to be the first point of contact with consumers. The licensing law came into effect on July 1, 2009. Under the new section 2773 regulation adopted by the DRE, the solicitation materials that must contain the license identification number include the following items:

• Business Cards
• Stationery
• Websites owned, controlled and/or maintained by the soliciting real estate license
• Promotional and advertising flyers, brochures, email and regular mail, leaflets, and any other marketing or promotional materials designed to solicit the creation of a professional relationship between the licensee and the consumer, or intended to induce a consumer to contact the licensee about any licensed service

DRE’s new regulations also states that the following items ARE NOT SOLICITAION MATERIALS under the license number requirement:

• Advertisements in electronic media, including radio, cinema, and television ads, and the opening section of streaming video and audio
• Printed advertising in any newspaper or periodical
• FOR SALE signs placed on or around a property intended to alert the public the property is available for purchase or lease. The regulations continues with details regarding the size of type and brokers involvement.