How does a short sale affect my taxes? The two answers to your question

Posted by Owen McGab Enaohwo on Aug 10, 2010 | View Comments

This is a question that I am frequently asked when discussing a possible short sale with a homeowner and I have decided to use this blog post as a means to share my answer with everyone. Please note that I’m not a CPA and for more clarification on this subject, I urge you to consult with a tax professional. Now that I am done with my disclaimer, let’s dive in!

The IRS’s perspective

When you are absolved of your responsibility to an unpaid debt, according to the IRS, this is income. For instance, let’s say that you still owe $100,000 on the home. The lender agrees to a $50,000 payoff as the terms of a short sale. This means that the lender is cancelling $50,000 of the debt. According to the IRS, this $50,000 is extra money in your pocket, and is therefore income.

What are the Differences between Tax Foreclosure and Mortgage Foreclosure?

Posted by Owen McGab Enaohwo on Aug 3, 2010 | View Comments

Generally, when we think of home foreclosures, we’re thinking of the mortgage foreclosure. This refers to the situation where the homeowner cannot keep up with his loan payments, and defaults. After a period of time, the lender begins the foreclosure process.

But there’s another type of home foreclosure; it is called the Tax Foreclosure. The bad news is that current trends are for property taxes to rise higher and higher. As they do so, not only will some people face mortgage foreclosure, but others who manage to escape that will be unable to pay their property taxes. This could force many of them into tax foreclosure.

In the near future, tax sales will become more common throughout the United States. This will especially be true in areas around the country that are worst hit with high unemployment rates.  Although the tax foreclosure resembles a regular foreclosure in many ways, there are also a few differences worth mentioning, so let’s dig in and explore the topic.

Maryland short sale approval success story: $85K Forgiven (discounted) by IndyMac Mortgage Services (OneWest Bank) in 45 days!

Posted by Owen McGab Enaohwo on Jul 31, 2010 | View Comments

My reason for doing this:

When a homeowner finally decides that he/she wants to sell their property via a Short Sale, they know that they only have a limited amount of time before the foreclosure and they need to be rest assured that the agent they are about to hire has the necessary experience to get the job done. This is the reason why I now write blog posts about my successes with Short Sales with various lenders. I pinch myself now because I wish I have started doing this a long time ago (enough with the rant – now to gist of this deal).

The background story:

Just this past April, I got a call from Patrick; a friend of the seller, Peace A. (my client and seller of this short sale). He explained to me that he had seen one of my blog posts online on short sales and he felt that I would be the best person to help Peace. After I explained my process to him, he referred me over to the seller whom I called immediately and took the time to explain how a short sale would help her avoid foreclosure. To cut a long story short I met with her and her friend at the property, signed up the listing and got to work. This short sale was different because she was going to be out of the country while I was negotiating with her lender and trying to get her property sold. Well, I took up the challenge and got the ball rolling!

 Testimonial from Peace A. [3:34m]: Play Now | Play in Popup | Download

Here is the Ironic true story of how the Mortgage Bankers Association did a Short Sale! A typical “Do As We Say and Not As We Do” type thingy!

Posted by Owen McGab Enaohwo on Jul 30, 2010 | View Comments

Irony of irony: Though I am a little late blogging on this story because this event actually took place February of this year, I think the moral of the story is still valid so let’s begin the tale! Once upon a time, one of the major organizations that complained about homeowners who opted for a short sale sold its D.C. headquarters as a short sale for $41 million dollars. That’s just about half of what they paid for their building about three years earlier.

The beginning of the tale: As the story goes, the organization called the Mortgage Bankers Association (AKA MBA); the trade group which represents more than 2,000 real estate finance companies bought the building in 2007 for just over $70 million. At the time, MBA said it would partly finance the property by leasing part of the space to other companies. It is said that they actually called the purchase one of the smartest moves they’d ever made.

Is a Short Sale Right for You? Read and then Decide!

Posted by Owen McGab Enaohwo on Jul 27, 2010 | View Comments

Real Estate is totally different today than it was just ten years ago, especially because of the “Great Recession”. One thing that has changed is that, more than ever, the term “Short Sale” is now a hot topic that almost anyone paying attention to the news media must have heard. Many sellers who have determined that they can’t sell their home for the amount they owe are now considering doing a short sale instead of allowing the lender to foreclose. But is it always a good thing? How can you tell whether a short sale is right for you? Let’s take a look at some guidelines that will help you decide.

Strategic Default Vs. Strategic Short Sale; which one do you think is the best choice? – Part 2

Posted by Owen McGab Enaohwo on Jul 21, 2010 | View Comments

In my Part 1 of this blog post, I pointed out a new study by Experian that showed an alarming number of homeowners who were electing to intentionally have their homes foreclosed upon by refusing to make their mortgage payments even though they can afford it. This trend which is now called a “Strategic Default” was accelerated greatly with the housing collapse of 2008, when homeowners suddenly found themselves in possession of homes that are now worth as little as half of what they paid for it, their home values have been reduced to the point that they feel like they are swimming in negative equity. Also the mortgage payment for many of these people have become more expensive than what they can pay as rent for a similar house—hence, they have made the financial decision to strategically default, to essentially walk away. Is this the right choice?