Guide to Short Sales

What is a short sale? A short sale is a sales transaction in which the seller's mortgage lender agrees to accept a payoff of less than the balance due on the loan. This page offers information about the basics of short sales and advice for the real estate professional.

Short Sale Advantages
Short sales appear on your credit report as "pre-foreclosure in redemption", not as "debt discharged due to foreclosure"

Less impact on your credit score

All mortgage debt is fully discharged

HUD Secretary Announces Monetization of Tax Credit at NAR Real Estate Summit

Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development, said that theFederal Housing Administration is going to permit its lenders to allow homeowners to use the $8,000 tax credit as a downpayment.

Secretary Donovan said that important changes, which the National Association of Realtors has been calling for, will help consumers purchase a home. "We all want to enable FHA consumers to access the home buyer tax credit funds when they close on their home loans so that the cash can be used as a downpayment" Donovan said. According to Donovan, the FHA's approved lenders will be permitted to "monetize" the tax credit through short-term bridge loans. This will allow eligible home buyers to access the funds immediately at the closing table.

Donovan said the Obama administration plans to further stabilize the housing market. "I do think we have some early signs that the market overall is stabilizing". "Since January we've seen both home sales moving up and down around a relatively stable number and we are seeing the first signs that the rapid decline in home prices is starting to abate."

NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said, "As the leading advocate for housing issues and homeownership, NAR continues to take a leadership role in promoting ideas for improving our economy by stabilizing the housing and real estate markets. Today we have the best of the best to begin a dialogue, develop solutions and initiate action toward real estate and economic recovery."

"Right now the Federal Reserve is the market," said Jay Brinkman, chief economist for the Mortgage Bankers Association. "What will be the effect when the Fed stops buying?" Brinkman explained that an exit strategy must be planned for the long-term; the federal government cannot continue to support the mortgage markets indefinitely.

"We must make sure FHA and the GSEs are supported," added the Wharton School's Susan Wachter.

Home Builders Unite: Pulte Homes buys Centex for $1.3B

In a sure sign that in order to survive the hobbled housing market you must take chances and make drastic moves, two of the largest home builders are going to be merging. According to the Washington Business Journal:

Pulte Homes Inc. has agreed to buy fellow homebuilder Centex Corp. in a stock swap valued at $1.3 billion. The acquisition also includes net debt of $1.8 billion, giving the entire transaction a cost of $3.1 billion.

According to Pulte CEO Richard J. Dugas, Jr. the combination will put both firms, "in an excellent position to navigate through the current housing downturn" and "accelerate a return to profitability." Pulte has lost money in each of the last nine quarters. Centex has been in the red for the last seven quarters.

HUD Money Makers: What is a HUD Property?

Understanding HUD Foreclosures
If the house you are interested in is a Housing and Urban Development (HUD) foreclosure, then it was last purchased with an Federal Housing Administration (FHA) mortgage. The Federal Government insured the loan, making the previous FHA loan possible. By insuring the loan the Federal Government agrees to repay the Lender for all money lost by the lender in case the property is foreclosed on. It's a good deal for the Lender as their investment is 100% insured. The Federal Government protects itself by collecting on each transaction of a federally financed property a Mortgage Insurance Premium (MIP) at the time of purchase. The MIP is 2.25% of the mortgage amount and is helpful in several ways because the MIP is charged, the FHA can allow a purchaser to reduce their initial out of pocket cash expenditure from 5% to 3% of the purchase price, making it possible for many more Americans to buy homes. HUD reports in their mission statement is that home ownership for the majority of Americans is their goal and that has proven to be the driving force behind their decisions and directives since their inception.

The MIP is pooled with all the other premiums and allows the Federal Government to continue helping homebuyers save money on their homes by keeping the costs down for homebuyers.

Each property has it's own financing options.

$8,000 Tax Credit that doesn't have to be paid back!

Who is eligible to claim the tax credit?
First-time home buyers purchasing any kind of home-new or resale-are eligible for the tax credit. To qualify for the tax credit, a home purchase must occur on or after January 1, 2009 and before December 1, 2009. For the purposes of the tax credit, the purchase date is the date when closing occurs and the title to the property transfers to the home owner.

What is the definition of a first-time home buyer?
The law defines "first-time home buyer" as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse. For example, if you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time home buyer tax credit. However, unmarried joint purchasers may allocate the credit amount to any buyer who qualifies as a first-time buyer, such as may occur if a parent jointly purchases a home with a son or daughter. Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer.

How is the amount of the tax credit determined?
The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000.

Are there any income limits for claiming the tax credit?
The tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) of more than $75,000 for single taxpayers and $150,000 for married taxpayers filing a joint return. The tax credit amount is reduced to zero for taxpayers with MAGI of more than $95,000 (single) or $170,000 (married) and is reduced proportionally for taxpayers with MAGIs between these amounts.

Welcome to Giovanna Chirco's Blog

Welcome to my real estate Blog. Please check back often as I will be posting updates on a regular basis.

Sincerely,
Giovanna Chirco