San Diego Short Sale
Do you owe more money on your home than it’s worth?
Can’t afford the mortgage payments?
Want to avoid foreclosure and/or bankruptcy?
Want to save your credit?
Wondering what your options are?
Is a short sale right for you?
We are San Diego Short Sale Specialists.
San Diego County has been inundated with people who cannot afford their mortgage payments, cannot refinance because their home value has dropped, and think that foreclosure is the only option. Foreclosure is not your only option. We are California Lending & Realty and we’ve helped a number of San Diegans just like you.
Let California Lending & Realty
Help Sell Your Property Fast
Save Your Credit
Walk Away With No Mortgage Debt & No IRS Issues
San Diego Short Sale Specialist
You Pay Us Absolutely Nothing!!
Your lender does not want to foreclose on you. They are not in the real estate business, they are in the lending business. They would prefer that we sell it (through a short sale) to get it off their books (even at a loss to the lender) than continue having that money tied up without producing revenue.
What is a short sale?
A short sale occurs when a property is sold and the lender agrees to accept a discounted payoff. This means that the lender will release the lien that is secured to the property upon receipt of less money than is actually owed.
Example of a short sale: You have a mortgage of $300,000 but the home is only worth $250,000. You are “short” $50,000 (not including fees, title/escrow, commissions, etc.) The $50,000, plus fees and commissions are paid/absorbed by the lender! Call us today to see if a short sale is right for you. We are San Diego short sale specialists.
Why will the lender pay the fees and commissions?
The lender has not been receiving monthly payments on the $300,000 it has lent you. It will take a few more months to foreclose on your home. That means a few more months of the lender not receiving monthly payments and incurring other holding costs. When they do finally take over your property, they will have to pay the realtors a commission when they sell it. We are not only helping you avoid foreclosure with the short sale, but also helping the lender by selling the property several months before they typically would.
A short sale is considerably less detrimental to your FICO scores than that of a foreclosure. A short sale on your credit report will most likely show that the debt has been settled. A foreclosure will stay on your report for seven years and would make your next home purchase much more difficult. If you recall when applying for your last home loan, the loan officer asked whether you had ever been foreclosed upon, not if you had ever been through a short sale.
Normally, you would be taxed by the IRS for the amount “forgiven”by your lender. Now, with the Mortgage Forgiveness Debt Relief Act, you may not owe the IRS anything for the amount forgiven!
The Mortgage Forgiveness Debt Relief Act of 2007 (H.R. 3648) — What is it?
The Mortgage Forgiveness Debt Relief Act of 2007 was enacted on December 20, 2007. Generally, the Act allows exclusion of income realized as a result of modification of the terms of the mortgage, or foreclosure on your principal residence.
What does that mean?
Usually, debt that is forgiven or cancelled by a lender must be included as income on your tax return and is taxable. The Mortgage Forgiveness Debt Relief Act of 2007 allows you to exclude certain cancelled debt on your principal residence from income.
California Lending & Realty is a real estate company that specializes in San Diego Short Sales. We are not accountants or lawyers, nor do we dispense legal or tax advice. We strongly encourage you to discuss with your lawyer and/or CPA the implications of doing a short sale. You can also go to the IRS website to learn more.
The San Diego real estate market has been hit hard with the latest downturn. We are San Diego Short Sale Specialists here to serve you. Please give us a call to help you avoid foreclosure, save your credit, and provide the possibility of walking away from your home with no mortgage debt or tax consequences from the IRS.
We are proud members of the San Diego Association of Realtors, California Association of Realtors, and the National Association of Realtors.
If your property is in San Diego County and you would like to know how you could benefit from a short sale, please give Michael Thomas a call (619-286-9400) for a free consultation or apply now for more information.
Real Estate Market Update
Owners who borrowed on equity face jolt
During the housing bubble, people didn’t just live in their homes — they used them as their personal ATMs.
Exploding real estate values gave millions of Americans the motivation to borrow against their home. They would take out home equity lines of credit, or HELOCs, meaning they could get cash for their equity.
Between 2004 and 2007, more than 325,000 San Diegans took out home equity lines of credit, totaling around $40 billion, real estate tracker DataQuick reports. Borrowers make interest-only payments on the loan for 10 years. After that, the line of credit converts to a mortgage and must be paid back — typically at a higher interest rate. Had home values kept rising, paying back the loans might have been easy, through a refinance or another line of credit. Today, however, many who bought during the housing bubble are just glad their homes have regained their original value, which plummeted during the Great Recession. Their equity disappeared, but the lines of credit remained. Now the bills from that first wave of HELOCs, taken out in 2004, are coming due. Homeowners must start paying on both interest and principal on the outstanding balance, and often at higher interest rates of 5 or 6 percent.
While many lines have been resolved, this year, 14,000 San Diegans who owe an average $71,000 from outstanding lines of credit are facing a jolt in their monthly payment, Equifax reports. On average, monthly payments will jump from $200 to $700 after the line of credit resets into a mortgage.
In all, the San Diego metropolitan area has about 115,000 total loans and just under $8 billion outstanding, Equifax says. Of that, roughly two-thirds of these loans are likely to reset to mortgages in the next 3 1/2 years.
“It’s one of those ticking time bombs that’s eventually going to happen,” said Bruno Lizarraga, a loan originator at San Diego-based Community Housing Works.
Lizarraga said one of his local clients – who he just refinanced – saw their monthly payment on their line of credit jump from $915 to $2,100 in the payback period. As of Dec. 31, 2013, nationwide there were $23 billion in outstanding balances due by the end of 2014, the Office of the Comptroller of the Currency. That amount climbs each year until hitting $56 billion by the end of 2017.
Dennis Carlson, economist at Equifax, said there will be bumps along the way, as studies show that delinquencies increase when the loans recast. But the good news, he said, is that the problem is solvable because many times banks are willing to work with their customers to modify the loans.
At Wells Fargo Bank, one of the nation’s largest originators of home equity lines of credit, senior vice president Kelly Kockos said people have lots of options on their lines of credit. Kockos, the home equity project manager, said homeowners who are underwater, or have a distressed loan, can restructure, or do a modification to make payments more manageable.
“It’s not a cookie cutter approach, we want to work with every borrower,” Kockos said. “We believe we have an option for almost every customer.”
Borrowers with equity who seek options other than paying back the loan often decide to refinance into a new home equity line of credit when their current one resets. If they decide to refinance, there would be one major difference this time around: earlier this month, Wells Fargo announced it would no longer offer interest-only payments on home equity lines of credit for the majority of its customers.
“It’s better for consumers and you avoid this end-of-draw issue 10 years down the road,” Kockos said, noting that about 5 percent of home equity lines of credit are paid back in one lump sum, instead of converting to a mortgage.
Moving forward, it appears banks will have fewer takers on the lines of credit.
In San Diego County, the number of people who took out the loans plummeted in the crash, before ticking up in the last few years. Last year, 9,569 borrowers took out home equity lines of credit, DataQuick reports. While that’s up almost double the number of loans from the bottom in 2011, the growth should not mimic what happened in the bubble, Carlson said.
“I think it’s made Americans a lot more thoughtful about their finances,” Carlson said. “I think now people are going to be using home equity much more carefully, if not them, they certainly know somebody who was impacted. It’s similar to the Great Depression. People were fundamentally changed by this.”