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4 Reasons Why 2011 May Be the Year for A Short Sale of Your California Home

4 Reasons Why 2011 May Be the Year for A Short Sale of Your California Home

•1)      California Senate Bill 931 (SB 931) - This important new law went into effect on January 1st.   It requires that first mortgage lenders forgive the deficiency when they accept a short sale on a dwelling with up to 4 units.  (The deficiency is the difference between what was owed on the mortgage, the expenses of sale, and the amount it was sold for during the short sale).  Without the protections of SB 931, an individual short sale seller had to make sure that the bank forgave the deficiency in the short sale approval.  Often, as a matter of policy, national banks would refuse to remove this possibility - leaving short sale sellers in limbo.  That uncertainty has been removed when dealing with a first mortgage lender in California by this new SB 931 legislation. 

•2)      Tax forgiveness on principal residences.  Under the federal Mortgage Forgiveness Debt Relief Act of 2007, sellers have a limited window of opportunity until the end of 2012 for potential tax forgiveness on the short sale of their principal residence.  Also, California state tax relief is limited as well until January 1, 2013.   It is possible that these favorable tax laws could be extended, but they also could not be extended, making 2011 an opportune time to short sell your home.

•3)      Recent HAFA Updates - The government HAFA program has been revised (effective February 1, 2011) to  make processing a short sale smoother under the HAFA.  Participant servicers are no longer required to verify financial information (although they still may if they wish), caps have been removed from amounts that second mortgage lenders can receive (giving more room to negotiate a deal everyone will agree to), the subject property can be rented for up to 12 months prior to the Short Sale Agreement if it was previously the seller's principal residence, and the time period for lender response to executed offers has been tightened.

•4)      You've had enough.  - This may be the most important reason of all.  Often, I meet with clients who are considering a short sale and when we begin to discuss things, I discover they have been in financial distress for 2 or more years.  If your home is massively underwater, the sooner you put it behind you the sooner you can begin your new life.  If you short sell your property, you may be able to get a new loan in 2 - 3 years under current FHA and Fannie Mae guidelines.  The sooner you complete the short sale the sooner that clock begins.

I am a Certified Distressed Property Expert and a Certified HAFA Specialist, and I can provide an in depth short sale consultation when you are ready; I can be reached at (805) 878-9879.

Tni LeBlancMint Properties
Broker/Attorney, Short Sale Agent
CA DRE License # 01871795
(805) 878-9879

Serving  Santa Maria, Orcutt, Nipomo, Los Alamos, Santa Ynez, Los Olivos, Solvang, Buellton, Lompoc, Arroyo Grande, Grover Beach, Pismo Beach, and Avila Beach.

*Nothing in this article is intended to solicit listings currently under contract with another broker. Those considering a short sale are advised to consult with their own attorney for legal advice, and their tax professional for tax advice prior to entering into a short sale listing agreement - this article does not offer legal and tax advice.

Copyright © Tni LeBlanc 2011 *4 Reasons Why 2011 May Be the Year for A Short Sale of Your California Home*

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Tni LeBlanc, Broker
(805) 878-9879 mobile/text

tni@mintprop.com
www.MintProp.com
CalBRE #01871795

Comment balloon 23 commentsTni LeBlanc, Realtor®, J.D. • January 08 2011 01:46AM

Comments

Great information to drive home to potential clients who are sitting on the fence and hoping to ride the "free rent" as long as possible or are unsure of what the positives are. 

Posted by Rene Bayani (Crestridge Partners) almost 8 years ago

It appears that once again California is going to lead the way in this worthy effort to help mostly innocent sellers.

Posted by Jon Quist, Tucson's BUYERS ONLY Realtor since 1996 (REALTY EXECUTIVES TUCSON ELITE) almost 8 years ago

Tni --- I certainly hope the banks will be more responsive to the needs of the current market with improved response time for those involved in the short sale process.  Thanks for presenting the changes so effectively.

Posted by Michael Jacobs, Los Angeles Pasadena 818.516.4393 almost 8 years ago

Michael - All the incentives are there to move on, get a clean slate, and begin your financial life anew.  Let's hope people take advantage.  California left short sale sellers in  limbo about tax relief for a long period last year - I wouldn't take anything for granted given the state's finances.

David - Good luck if they want to take back all this CA real estate through foreclosure!  Unfortunately, we have a lot of underwater homes.  I think they will have to do what they always do.  Create an asterisk for California law.

Jon Quist - Yes we tend to lead the way.  The next step is to deal with those second mortgage lien holders.  Once that is solved short sales will truly become routine. 

Michael Jacobs - Moving faster would be even better.  Many are getting better.  But there are still some award winners out there that still have remarkably unreasonable delays. 

Posted by Tni LeBlanc, Realtor®, J.D., Tenacious Tni (805) 878-9879 (Mint Properties, Lic. #01871795) almost 8 years ago

Tni, good reasons.  I know several people that at stage 4, they have just had enough! 

Posted by Tony & Darcy Cannon, The C Team (Aubrey and Associates Realty) almost 8 years ago

Tony - Yes, I think this is the most important factor.  Financial distress is wearing on people and many are ready to shed it if they can.  A short sale could be the answer for many.

Posted by Tni LeBlanc, Realtor®, J.D., Tenacious Tni (805) 878-9879 (Mint Properties, Lic. #01871795) almost 8 years ago

The forgiveness is wounderful and the sellers should take advantage.

Posted by Tim Lorenz, 949 874-2247 (TIM LORENZ - Elite Home Sales Team) almost 8 years ago

Tim - I agree. I think if you have the need, this is the year to jump on the short sale bandwagon.

Posted by Tni LeBlanc, Realtor®, J.D., Tenacious Tni (805) 878-9879 (Mint Properties, Lic. #01871795) almost 8 years ago

I've been negotiating short sales for a few years now, and my team hasn't had a negotiated short sale approval that didn't include a waiver of deficiency.  The banks will try to tell you they won't remove their deficiency rights, until they know the seller/you are not wavering.  The new law is simply a way for inexperienced or poorly qualified agents to assist clients they shouldn't have.

P.S.  Ranking for Ca. SS Agents in the Google search isn't worth the typing.  I've been listed at the top for those keywords and have NEVER received a call or email originating from the exposure.  Somehow, they always search locally for an Realtor.

Posted by Cameron Novak, Featured Corona Real Estate Agent Team (The Homefinding Center) almost 8 years ago

This also applies to the rest of the US. . 2011 will be  the year of the short sale

Posted by Fernando Herboso - Broker for Maxus Realty Group, 301-246-0001 Serving Maryland, DC and Northern VA (Maxus Realty Group - Broker 301-246-0001) almost 8 years ago

Hi Tni, hopefully, more homeowners will do short sales instead of riding it out until the Sheriff comes.

Posted by Jackie Connelly-Fornuff, "Moving at The Speed of YOU!" (Douglas Elliman Real Estate in Babylon NY) almost 8 years ago

Tni. This is a great bill for CA homeowners. I would love for Florida to pass something similar. But I don't know if that will happen or not. Getting a waiver of deficiency in Florida is not easy.

Posted by Bryant Tutas, Selling Florida one home at a time (Tutas Towne Realty, Inc and Garden Views Realty, LLC) almost 8 years ago

Tni this is a very informative post for distressed homeowners in California.  It certainly also gives them an idea of which agent to look to if they are considering a short sale in your area!

Posted by Christine Smith, Exclusive Buyer Agent & Attorney, Canton, MA (Buyers Brokers Only LLC - www.BuyersBrokersOnly.com) almost 8 years ago

Cameron - Congrats on your success -- You are awesome!  Still won't it be nice to get back some of that negotiating time and be able to use it elsewhere on your short sales?  I believe so many short sales will be needed that the process needs to be simplified.  Really attorneys should be handling them, but they have left it to the real estate community so I do think they should be simplified.  Every seller won't have as great an agent as you on their side!  

Thanks for the SEO tip too - though I wasn't trying for that just trying to leave the article general enough to be re-blogged if someone else from CA wanted to re-blog it. 

Fernando - I agree. It feels like the right time - all the incentives are there!

Jackie - Yes I think a short sale can be a dignified ending to a difficult situation.

Bryant - Yes, CA is at the forefront here.  I think it is really a fair thing since in many cases if they foreclosed in CA they can't pursue either, so there was a disincentive to do a short sale in some cases before.  Or at least you were taking a risk.  This makes it a lot more straightforward.

Thanks Christine! 

Posted by Tni LeBlanc, Realtor®, J.D., Tenacious Tni (805) 878-9879 (Mint Properties, Lic. #01871795) almost 8 years ago

I feel like this morning was "reblog Tni morning"....you are on a roll! I love your posts and this is just another great example.

Posted by Karen Fiddler, Broker/Owner, Orange County & Lake Arrowhead, CA (949)510-2395 (Karen Parsons-Fiddler, Broker 949-510-2395) almost 8 years ago

Tni - I am here from a re-blog. This is a wonderful and articulate breakdown of what a seller, and a buyer, really needs to know. So many in trouble just don't know where to go. They are depressed and frustrated.

There are some good points here that will help them. All the banks say is go to HUD. They are thrown to the wolves in trying to figure it all out. It is nice to have some of the information at thier hands from posts like these.

Nice job.

Posted by Ken Barker Realtor® GRI, E-Pro Certified (Dilbeck Real Estate) almost 8 years ago

Great summation of the recent changes in short sale related laws. Very handy reference to go over wiht clients. Thank you.

Posted by Maya Swamy, Ph.D. Long Beach, CA - fundsavailable.com (Funds Available) almost 8 years ago

Tni this year is definately the best year for Short Sales.. Let's only hpe that 2011 will be the year that banks actually learn to be less jerk whods and stop losing documents and having us resend them and give us the right fax number to begin with... Hopefully they develop some etiquette this year.

Posted by Stacey Smith, Your Orange County Beach Cities Realtor (Keller Williams Realty) almost 8 years ago

Thanks Karen!

Thanks Ken - I sincerely believe that this is the year for people to do a short sale if they have a need.  The incentives are now in place.

Thank you Dr. Swamy!

Stacey - I agree it is the year for it.  Whether banks will get it together -- that is yet to be seen!

Posted by Tni LeBlanc, Realtor®, J.D., Tenacious Tni (805) 878-9879 (Mint Properties, Lic. #01871795) almost 8 years ago

Great post Tni.  Informative and concise and homeowner's considering a short sale or other foreclosure alternatives will find it useful.

Posted by Dave Gubler, Realtor | Orange County (Mission Viejo, Foothill Ranch, Lake Forest, Ladera Ranch) almost 8 years ago

Dave - Glad you liked it!

Posted by Tni LeBlanc, Realtor®, J.D., Tenacious Tni (805) 878-9879 (Mint Properties, Lic. #01871795) almost 8 years ago

Great post Thi.

p.s. I'm just curious, how this post of 2011 with 2011 comments is dated by 2014?

Posted by Inna Ivchenko, Realtor® • Green • GRI • HAFA • PSC Calabasas CA (Barcode Properties) about 4 years ago

Hi Inna,

I'm curious too.  I don't recall reposting it!

Tni

Posted by Tni LeBlanc, Realtor®, J.D., Tenacious Tni (805) 878-9879 (Mint Properties, Lic. #01871795) about 4 years ago

Participate