Las Vegas Short Sales: Bank of America Issues Changes to Short Sale Programs

Bank of America came out with a few changes to their short sale programs today. The first change mostly affects flippers. Short sales closed through Bank of America now have deed restrictions upon re-selling the property. The home cannot be resold within 30 days (aimed directly at double-closings). Furthermore, the home can only be resold for 120% of the short sale price within 90 days after the short sale closes. Many flippers use high interest, liquid funds and often want to sell the home quickly to avoid high holding costs.  This will not in all likelihood stamp out flipping but the trend is clearly designed to hamper it. The banks are upset that money is being left on the table that they did not recover on the original short sale.

The other set of changes relate to seller incentives for relocation expenses from Freddie Mac and Fannie Mae if they are the institution which holds the note that Bank of America may be servicing on behalf of your mortgage. Fannie and Freddie may pay up to $3,000 on short sales except in the following cases:

1. The borrower is required to contribute funds or execute a promissory note.
2. The borrower has Permanent Change of Station (PCS) orders and receives a Dislocation Allowance (DLA) or other government relocation assistance.
3. The servicer has knowledge that the borrower is receiving relocation assistance from another source other than the servicer.

It should be noted that if the seller is receiving incentives from another source for the short sale and it exceeds $3,000 and this is a Freddie Mac or Fannie Mae loan, then no incentive will be paid in addition to the alternative incentive payment.

There are now multiple incentive programs related to Bank of America serviced loans; some in excess of $30,000. If you know that some point your upside down mortgage is unsustainable then it is important to check out all your options that may provide a graceful exit from the situation and maybe even get some money on the way out as well.

You may call Shelter Realty for a personal assessment to explore if a short sale is a good option you. Call 702-376-7379 or complete our contact form.

Reprieve for Las Vegas Home Owners: Mortgage Debt Forgiveness Act Extended until Jan 1, 2014

Las Vegas home owners of primary residences who were facing foreclosure in 2013 would have faced serious tax consequences without this extension. The original Debt Forgiveness Act of 2007 signed by President Bush allowed for owners of principle residences who either were foreclosed upon or who short sold their home to avoid significant capital gain taxes. Owners were exempted from the heavy taxes as long as their home was considered a principle residence during the preceding five years and the debt forgiven was used to purchase the home or were used as documentable improvements to the residence.

Congress has now extended the Act through 2013 which will help both types of owners, those who get foreclosed and those who want to do a short sale. Owners who know they cannot get a loan modification and are considering a short sale have a clearer path to selling their home and debt relief.

Any persons with questions may call Shelter Realty for a personal assessment if a short sale is a good option for them. He may be reached at 702-376-7379.