Comments on: San Diego Real Estate: Short Sale, Foreclosure or Deed in Lieu? http://sandiegopreviews.com/2008/07/01/san-diego-real-estate-short-sale-foreclosure-or-deed-in-lieu/ Searching Homes in Carlsbad, Encinitas and San Diego Sat, 22 Nov 2008 05:55:10 +0000 http://wordpress.org/?v=2.6.1 By: gabriel bolivar http://sandiegopreviews.com/2008/07/01/san-diego-real-estate-short-sale-foreclosure-or-deed-in-lieu/#comment-883 gabriel bolivar Mon, 29 Sep 2008 19:37:21 +0000 http://sandiegopreviews.com/2008/07/01/san-diego-real-estate-short-sale-foreclosure-or-deed-in-lieu/#comment-883 I own a brokerage in Los Angeles, but I am in need of your assistance for a client of mine who would like to do to do a short sale on his property in Chula Vista. Does your office a referral fee for such a transaction? I own a brokerage in Los Angeles, but I am in need of your assistance for a client of mine who would like to do to do a short sale on his property in Chula Vista. Does your office a referral fee for such a transaction?

]]> By: Search San Diego Foreclosures and Auctions | Carlsbad, Encinitas and San Diego Luxury Real Estate http://sandiegopreviews.com/2008/07/01/san-diego-real-estate-short-sale-foreclosure-or-deed-in-lieu/#comment-820 Search San Diego Foreclosures and Auctions | Carlsbad, Encinitas and San Diego Luxury Real Estate Mon, 04 Aug 2008 05:30:58 +0000 http://sandiegopreviews.com/2008/07/01/san-diego-real-estate-short-sale-foreclosure-or-deed-in-lieu/#comment-820 [...] San Diego Short Sale, Foreclosure or Deed-in Lieu-of-Foreclosure?  [...] [...] San Diego Short Sale, Foreclosure or Deed-in Lieu-of-Foreclosure?  [...]

]]> By: Bob Wilson http://sandiegopreviews.com/2008/07/01/san-diego-real-estate-short-sale-foreclosure-or-deed-in-lieu/#comment-793 Bob Wilson Mon, 14 Jul 2008 21:54:07 +0000 http://sandiegopreviews.com/2008/07/01/san-diego-real-estate-short-sale-foreclosure-or-deed-in-lieu/#comment-793 it isn't about Fannie or Freddie. First off, reporting of a 1099 C (cancellation of debt) is a statutory requirement - Sec. 6050P, regardless if it's owner occupied or not. California' FTB is inline with the Feds - reporting cancellation of debt in excess of $600 is the law. You can't negotiate statutory issues by definition, but if somehow you manage to convince a lender to break the law, the borrower is still bound to report it. Where the short sale comes up short is with state taxes. There is no mortgage debt forgiveness in California, so every dollar a seller doesn't get may be subject to state income tax. In order for your investor to make a profit, he has to get it for as little as possible so he can turn it at a higher price. If you can sell it for the investor at the higher price, then why not for the distressed seller? The difference has a taxable value to the seller. Verify this with a tax attorney, but I think you will find that a purchase money loan that is foreclosed upon in California is not subject to state income tax, but the debt forgiven as a result of a short sale is subject to state income tax. A short fall of $100k or more, taxed as ordinary income, can be quite expensive. In that case it may come down to literally putting a price on one's credit more than how soon one can re-enter the housing market. Telling people that the short sale is across the board the better option is incorrect. it isn’t about Fannie or Freddie.

First off, reporting of a 1099 C (cancellation of debt) is a statutory requirement - Sec. 6050P, regardless if it’s owner occupied or not. California’ FTB is inline with the Feds - reporting cancellation of debt in excess of $600 is the law. You can’t negotiate statutory issues by definition, but if somehow you manage to convince a lender to break the law, the borrower is still bound to report it.

Where the short sale comes up short is with state taxes. There is no mortgage debt forgiveness in California, so every dollar a seller doesn’t get may be subject to state income tax. In order for your investor to make a profit, he has to get it for as little as possible so he can turn it at a higher price. If you can sell it for the investor at the higher price, then why not for the distressed seller? The difference has a taxable value to the seller.

Verify this with a tax attorney, but I think you will find that a purchase money loan that is foreclosed upon in California is not subject to state income tax, but the debt forgiven as a result of a short sale is subject to state income tax. A short fall of $100k or more, taxed as ordinary income, can be quite expensive. In that case it may come down to literally putting a price on one’s credit more than how soon one can re-enter the housing market.

Telling people that the short sale is across the board the better option is incorrect.

]]> By: Roberta Murphy http://sandiegopreviews.com/2008/07/01/san-diego-real-estate-short-sale-foreclosure-or-deed-in-lieu/#comment-790 Roberta Murphy Mon, 14 Jul 2008 04:42:48 +0000 http://sandiegopreviews.com/2008/07/01/san-diego-real-estate-short-sale-foreclosure-or-deed-in-lieu/#comment-790 Bob: How is a 4 to 7 year Fannnie Mae penalty for a Deed in Lieu of Foreclosure better than a 2-year ding for a short sale? The only issue to be negotiated, as I see it, is any deficiency judgment--or a 1099 if not owner-occupied. I would fear a lawsuit if I advised clients that a deed in lieu of foreclosure would be less damaging than a short sale. Perhaps there is there something I am missing with this recent Fannie Mae announcement? Bob: How is a 4 to 7 year Fannnie Mae penalty for a Deed in Lieu of Foreclosure better than a 2-year ding for a short sale?

The only issue to be negotiated, as I see it, is any deficiency judgment–or a 1099 if not owner-occupied.

I would fear a lawsuit if I advised clients that a deed in lieu of foreclosure would be less damaging than a short sale.

Perhaps there is there something I am missing with this recent Fannie Mae announcement?

]]> By: Bob Wilson http://sandiegopreviews.com/2008/07/01/san-diego-real-estate-short-sale-foreclosure-or-deed-in-lieu/#comment-789 Bob Wilson Mon, 14 Jul 2008 04:27:59 +0000 http://sandiegopreviews.com/2008/07/01/san-diego-real-estate-short-sale-foreclosure-or-deed-in-lieu/#comment-789 Toberta, You are way off on this one. There are very legitimate reasons why a deed in lieu or foreclosure is preferable to a short sale, particularly with you advocating that your clients accept less than market for their properties from your investor. Your advice is lawsuit bait. Toberta, You are way off on this one. There are very legitimate reasons why a deed in lieu or foreclosure is preferable to a short sale, particularly with you advocating that your clients accept less than market for their properties from your investor.

Your advice is lawsuit bait.

]]> By: Roberta Murphy http://sandiegopreviews.com/2008/07/01/san-diego-real-estate-short-sale-foreclosure-or-deed-in-lieu/#comment-783 Roberta Murphy Fri, 11 Jul 2008 04:03:24 +0000 http://sandiegopreviews.com/2008/07/01/san-diego-real-estate-short-sale-foreclosure-or-deed-in-lieu/#comment-783 Susan: It is true that some are advising clients that short sales and foreclosures bear the same consequences. NOT SO! It is a critical information campaign all real estate professionals should embrace. Susan: It is true that some are advising clients that short sales and foreclosures bear the same consequences.

NOT SO!

It is a critical information campaign all real estate professionals should embrace.

]]> By: Susan http://sandiegopreviews.com/2008/07/01/san-diego-real-estate-short-sale-foreclosure-or-deed-in-lieu/#comment-782 Susan Fri, 11 Jul 2008 03:57:35 +0000 http://sandiegopreviews.com/2008/07/01/san-diego-real-estate-short-sale-foreclosure-or-deed-in-lieu/#comment-782 Wow, some realtors are considering them one of the same. That's horrible. Wow, some realtors are considering them one of the same. That’s horrible.

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