What do our clients think?

We can preach to you all day about how good we are, but it becomes real when you can hear it directly from a client.

This was just received by my partner, John Durante from one of his recent clients…

 

What do our clients say?

203 days

203 days…that is the number of days until our politicians let the Mortgage Debt Relief Act expire!

And for upside-down homeowners who have yet to move forward on a short sale…this could spell disaster.

In a short sale, homeowners, and their agents, work with the bank to sell their home for an amount less than their mortgage balance, which allows them to avoid foreclosure. The difference between what they owe and what the bank ‘nets’ on the short sale is commonly referred to as the ‘deficiency’. While the Mortgage Debt Relief Act is in place (until the end of this year), qualifying homeowners can avoid taxes on the forgiven debt (deficiency related to the short sale. This is a huge benefit.

Forgiven debt may be considered income by the IRS and be subject to income tax. For example, if you are upside-down $100,000, the bank may end up with a forgiven deficiency close to $120,000 . If you are in the 20% tax bracket, without the Mortgage Debt Relief Act being in place, you could have a tax liability of $24,000 in the year the deficiency is forgiven!

According to the IRS, “The Mortgage Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief.”

The act has set a deadline of Jan. 31, 2013, for the completions of short sales in order to qualify for the tax relief. Since many short sales take an average of four to eight months to complete, you are quickly are running out of time to initiate and complete your short sale.

Don’t leave this potential huge liability in the hands of the politicians!

Call us today to see how we can help you get out from under. All calls and emails are strictly confidential.

Thanks for reading…Steve Jackson

561-.602.1258 (direct)

The story behind the story within the story

Recent housing data reports have been touting the “bottom” in the housing market and have been generally encouraging. However, the large number of residential properties that are "underwater"—meaning the borrower owes more on the mortgage than the property is worth—casts a long, dark shadow on the sustainability of the housing “recovery”….especially here in Palm Beach County.

Data from the most recent CoreLogic report estimates that there are somewhere in the neighborhood of 11 million homes nationwide that are under water; and, an additional 2.5 million homes have mortgages within 5% of the underwater mark. According to the most recent Zillow report, in Palm Beach County, approximately 43% of all homes with a mortgage are underwater and another 5% are within shouting distance of being underwater.

Consider this sobering as well as sad fact: out of the 4.3 million mortgages in the state of Florida, the AVERAGE equity position is 12.8%!

Now, if one were to read only the recent articles in the local papers, it would lead to the opinion that the storm has passed, the worst is over and the home price recovery is underway! Not so fast!

Consider the following: Since the 50-state Robo-signing settlement was ratified, bank have dramatically increased the rate of foreclosure filings here in Palm Beach County…March filings were up 65% over 2011, April filings were up 60% over 2011, and although May figures have not yet been released, that are expected to follow suit.

Florida is what is know as a Judicial foreclosure state…the aspect of that with importance to this story is the fact that foreclosures, from start to finish, average over 2 years here locally. So the foreclosure filings of March and April of this year may well not hit the market until mid 2014! Now some do move along more quickly…and some end up as short sales ( and a miniscule portion make up the missed payments or get a permanent modification). BUT, the continuing and steady flow of distressed properties into the market here will  have the effect of continued downward pressure on values for the foreseeable future.

A secondary factor important to any sustained home value recovery is job creation/retention. But, the weaker-than expected jobs report for May doesn’t bode well for the overall economy, but for housing it is far more foreboding…the numbers are going in the wrong direction. The May 2012 jobs report was a step backward for housing.

“The recent trend is reminiscent of the monthly patterns of the spring slowdown witnessed over the last two years that continued through the summer months. If this pattern recurs, we expect that hopes for a meaningful housing recovery will be delayed once again,” says Fannie Mae’s chief economist Doug Duncan, who also notes that signs of improving consumer sentiment in housing is unsupported by today’s data.

If you are thinking of buying OR selling…lets talk first and I’ll give you the insight and analysis necessary for you to make the best decision.

Thanks for reading…Steve Jackson

561.602.1258 (direct)