Short Sale Deadlines and Pressured Escrows From Now Until End of 2012

 

If your home has mortgage debt and liens larger than the property value, you are underwater.  An if you are underwater on your home mortgage, now is the time for you to take action and do a short sale.

U.S. Mortgage Debt Forgiveness Act of 2007 - tax relief law - allowing homeowners to exclude from income certain debts that have been forgiven by the lender - is set to expire December 31, 2012.

That's important for you, because it can take up to 6 months to receive short sale approval and close a short sale escrow. 

After this tax relief law expires December 31, 2012, you as seller in  a short sale must report to IRS the debt relief received from the short sale lender as income on their federal tax returns.

This tax break has not yet been extended, so time is of the essence for you as short sale seller.

Escrows in California look at and have pressure to resolve lots of issues when processing a short sale:

• Written and signed purchase agreement detail
• Short Sale Addendum to the Purchase Contract
• Real estate commissions
• Written Short Sale Approval Letter from lenders/lienholders
• Sales Price and Proceeds amounts must match what is stated on Short Sale Approval letter.
• If proceeds to lender, must confirm receipt amount stated on the Short Sale Approval letter
• Escrow must close within stated time frame or extension on updated Short Sale Approval letter  
• Possible cost of Short Sale Negotiator Fees, Home Warranty, Repair and retrofit, termite and wood repair, inspection fees 
• Delinquent property taxes and liens
• HOA fees and delinquency liens
• Possible resubmission to short sale lender for a revised approval letter might be needed and would cause delays.
• County property transfer tax and fees 
• Escrow, document preparation fees and closing costs - Confirm agreement by lender/lienholder in short sale approval letter

In order to get relief under the U.S. Mortgage Debt Forgiveness and Debt Relief Cancellation law of 2007, you as owner must list, sell your home and close escrow prior to December 31, 2012.

If you are under water on your California home and want to sell, now is the time.  Contact and hire an experienced Realtor and get it going for the short listing and sale.  

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This is for information only and is not the providing of professional legal or tax services.  For questions about your rights and responsibilities under the U.S. Mortgage Debt Forgiveness and Debt Relief Cancellation law of 2007 - contact a real estate attorney.  

 

Contact us about listing and sale of Orange County CA homes and real estate. ~ Professional REALTOR® agent representation and help for property owners, private trust estate representatives, estate administrators, executors and heirs, probate and trust attorneys, estate planners, income tax professionals, public guardians, fiduciaries, investor group managers, bankers, and individuals, with listing and sale of properties at Orange County, CA.

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