By a letter released November 15, 2013 the IRS has confirmed that most recent (and future) California short sales will not generate taxable cancellation of debt income. While this letter was issued in the context of short sales occurring after 2013 the reasoning applies to many short sales all the way back to January 1, 2011 when California Code of Civil Procedure (CCP) Section 580e first became effective.
The IRS letter dated September 19, 2013 was a response to one sent from California Senator Boxer but the Senator’s office did not release it until November 15. Both letters are available to free subscribers at the end of this article.
[Note: This article is educational and does not constitute attorney-client advice or establish an attorney-client relationship. While the author believes the opinions stated are valid, the author does not accept liability for any reader relying upon them without establishing a direct, compensated, attorney-client relationship. Please check with your own tax and legal adviser or retain the author to determine how this applies to any specific situation.]
Many California short sale sellers have Read the rest of this entry »
On February 12 I pointed out on this blog how Bank of America was requiring listing agents to lie and violate their MLS rules by keeping short sales as “Active” even after there was a binding contract to purchase the property.
It has come to my attention that Fannie Mae appears to be doing the same.
In a webinar hosted with the California Association of Realtors(r), Fannie instructs agents to list a property as “Active,” because “Other statuses such as ‘Pending’ may discourage buyers and other agents from considering the property and/or decrease likelihood of a competitive offer.
Slide 10 of the Fannie presentation is pictured below:
I am not going to re-explain why this Read the rest of this entry »
It took a record short time of less than three days for Bank of America to respond to a groundswell of agent objections to retract an updated short sale listing requirement that appeared to require listing agents to lie and to break their MLS board rules.
Whether the February 11 “reminder” was an attempt by Bank of America (which refers to itself as “BANA”) to engage in over-reaching interference in the agent-seller fiduciary relationship or just a poorly worded directive arising out of ignorance is anybody’s guess. All we know at this time is that BANA issued a sensible clarification in less than three days.
The poorly worded “reminder” instructed agents to keep a property’s Read the rest of this entry »
[NOTE: There is an important update about this information posted on this blog on February 14 at http://bit.ly/YceBUc ]
Not only does an updated Bank of America short sale listing rule require the short sale listing agent to lie, it also dictates that they breach their MLS rules and put their sellers’ property and persons at risk – as well as their license.
On February 11, Bank of America (who refers to itself these days as “BANA”) issued an update to its short sale listing rules. The entire update is posted at the end of this article.
Two aspects are particularly disturbing. The first requires a short sale which is under a binding legal contract to retain a MLS status of “active.” The second is that it prohibits comments that may appear to limit Read the rest of this entry »
On November 29, 2012, the FHA extended the waiver of the 90-day “anti-flipping” rule for two years, through December 31, 2014. Last year’s extension was only for one year. You can get the link to the actual release in the Federal Register at the end of this article.
Despite all of the hype about the “recovery” of the housing market, the two year extension ostensibly implies that FHA foresees two more years of distress property inventory that will need clearing.
The key terms of the waiver remain unchanged, particularly:
“To be eligible for the waiver of the Property Flipping Rule, an FHA-approved mortgagee must ensure that the mortgage meets the following conditions:
1. All transactions Read the rest of this entry »
Real estate agents (and attorneys) soon will be held legally responsible for reading the corporate mind of Bank of America. Fortunately for everyone else, they will not be allowed to even communicate with Bank of America, much less be required to read its mind. Unfortunately, all of this will further harm distressed borrowers and suffering neighborhoods by discouraging short sales and increasing foreclosures.
This all results from a new “Third Party Authorization” form (TPA) which reportedly is mandatory on all Bank of America short sale files as of April 14, 2012.
It’s also time to add another acronym to your spell checker: BANA. No, it’s not a miniature version of a yellow tropical fruit. Bank Read the rest of this entry »
Despite the “professional” statisticians analyzing the distressed property markets, one independent brokerage decided to gather the facts themselves. They concluded that in 2011 bank owned foreclosure properties sold for 24% less than short sales.
McGeough Lamacchia Realty, with offices in Massachusetts and New Hampshire, apparently got fed up with all the talk about losses in the market and decided to gather their own facts. Their results are reported at http://bit.ly/A1M8XT .
They concluded that the average REO price for 2011 in five major distressed markets was 24% lower than the average short sale price, which was actually an improvement from 26% in 2010. (Southern California though was 23% in 2011, compared to 22% in 2010.)
Good statisticians will tell you that Read the rest of this entry »
For the last several years private investors buying mortgage notes to facilitate short sales have been a quiet force for effective transactions outside of California. This practice is becoming increasingly more available in California recently as well.
What or who is a “note buyer” and how can they help with a short sale?
To understand these questions, one needs a basic understanding of real estate finance. Pretty much every residential real estate loan in California is represented by two primary documents: a “note” and a “deed of trust.” The term “note” is short for “promissory note.” A promissory note is the basic loan agreement between a lender and borrower. It is ” a note containing Read the rest of this entry »
For nearly two years now we’ve heard Freddie Mac attacking private real estate investors who want to buy and resell short sale and REO properties as engaging in “fraud.” They have repeated this lie so much that it is accepted as “true” by many in the residential real estate industry, especially real estate agents receiving “risk management” training — even some law enforcement and regulatory personnel who SHOULD know better have been duped by the constant repetition.
For nearly two years now, I and many other real estate lawyers, investors, educators, and funders have been showing how the Freddie Mac statements are legally wrong. I first wrote about it on April 17, 2010 at http://bit.ly/NotFraud Read the rest of this entry »
The news is abuzz with this “historic” settlement that gives the big banks a big break and does little for consumers. As we’ve seen in the past, the claims in the press releases and sound bites are rarely close to the reality.
Over the next several weeks I expect to dig into the actual agreement in this column and point our reality vs. political statements. For now, it looks like the main site to get less-filtered and self-congratulatory information from polticians seeking re-election or to bolster their favorite incumbent is
At this moment the Executive Summary isn’t even posted — so it’s anyone’s guess what press releases are based upon. At some future time Read the rest of this entry »