Phoenix, Gilbert, Chandler, Mesa, Tempe, Queen Creek and Scottsdale Short Sale Information
Many Phoenix homeowners walk away from their homes allowing them to go into foreclosure without considering the alternatives and options available to them. This is unfortunate and unnecessary. Those facing financial hardship should owe it to themselves to become acquainted with the options.
Arizona Short Sale Sellers Advisory
Questions regarding Arizona anti-deficiency laws and tax implications are important considerations and are best answered by a qualified real estate attorney and CPA familiar with Arizona anti-deficiency statutes.
Recent estimates calculate that 51% of Phoenix area homeowners that have a mortgage owe more than the value of their home. For this reason, it is critical that Gilbert, Chandler, Mesa, Tempe and Scottsdale homeowners understand their options to foreclosure.
Why Would A Bank Agree To A Short Sale?
Freddie Mac CEO, Ed Haldeman, summed it up best when he said, "Freddie Mac is doing everything it can to prevent more foreclosures, and short sales are becoming an ever-popular tool in situations where foreclosure is imminent and modifications have failed."
Is there a financial incentive for lenders to allow an Arizona short sale vs. a foreclosure?
Mr. Haldeman further commented regarding short sales and deeds-in-lieu of foreclosure that these alternatives are also helpful to lenders and insurers. Citing several independent studies, Haldeman said banks lose more than $50,000 per foreclosed home or as much as 30-to-60% of the outstanding mortgage.
Can a short sale help you?
Foreclosure can be devastating to your credit. There is another option. If you qualify, banks will consider a short sale for your home. A short sale is a situation where if your house sells at the current market value, the proceeds will not be sufficient to cover the loan balance. Please call me with any questions regarding short sales in Phoenix, Gilbert, Chandler, Mesa, Tempe, Scottsdale and Queen Creek.
If you would like to know more about this option, please fill out this short sale form. More and more homeowners find themselves confronted with a difficult situation when they encounter a financial hardship and need to sell their home. In all too many situations they have negative equity and must consider a short sale. To learn more about the options available to those in this situation, call me directly or e-mail me for an appointment.
Are there tax consequences to an Arizona Short Sale?
Most of the discussion regarding tax consequences of an Arizona short sale and the accompanying tax consequence involves The Mortgage Forgiveness Debt Relief Act of 2007. This provision applies to debt forgiven during the calendar years of 2007 through 2012. The most common circumstances where forgiven debt is not taxable involve:
- Debt forgiven involving a principal residence.
- Non-recourse loan: A non-recourse loan is a loan for which the lender’s only remedy in case of default is to repossess the property being financed or used as collateral.
- If you are insolvent when your debt is cancelled.
Tax consequences of any Arizona short sale must be verified with an experienced tax advisor. It is also recommended that the owner consult a knowledgeable real estate attorney when an owner is executing the short sale on a rental property that has not been a principal residence. Depending on the nature of the loan; recourse vs. non-recourse, the tax consequence may change.
Benefits of an Arizona short sale
Do short sales have any benefits? Yes.
- Under Fannie Mae guidelines a borrower can be eligible to purchase another home in two years instead of 5 – 7 years with a foreclosure.
- Prevents blight in the neighborhood because the owners walked away, leaving the house vacant for up to 6 months without any attention or maintenance.
- Minimizes the damage to the seller’s credit due to the manner it is reported to the credit bureaus versus a foreclosure. Much of the damage comes from the missed payments prior to the short sale or foreclosure. A short sale may be reported “Settled in full for amount less than owed”, “Paid as negotiated”, or something similar versus a foreclosure which will remain on a credit report for 10 years.
- Provides a way for those with a financial hardship to exit with dignity when a loan modification will only keep them in a home with a over-priced loan when compared to the current market value.
- A foreclosure may be viewed as a serious issue for current and future employers.
If you are experiencing a financial hardship and want to know what options are available,schedule a free consultation.
Short Sale Client Feedback
"A short sale is a long and arduous undertaking. Having Gordon's help in this process made it possible to do from another state. His experience and insight into what road blocks might lie ahead prepared me for the journey and made it go much smoother. I don't think I could have done it without him."
Gordon is a very knowledgeable real estate broker. What made my specific short-sale case rather difficult was that I was an out-of-state client, trying to sell a home in Arizona after being relocated to another state for work, along with having renters occupying the property at the time of the listing/sale. I was very pleased with Gordon and would recommend his services to anyone.
Can a bank take money from a deposit account to make a payment on a loan?
According to the Comptroller of the Currency Administrator of National Banks, YES. It is called "Right of Offset" This is a concept anyone involved in a short sale or the foreclosure process should understand.
"Generally, a bank may take money from your deposit account to make a payment on a separate debt that you owe to the bank, such as a car loan, if you are not paying that loan on time. This is called the right of offset.
In some situations, the bank can exercise the right of offset without letting a customer know in advance that it is going to do it."
What can you do? Make sure you do not have asset accounts (checking, savings and investment accounts) with the same institution where you have your home loan, especially if you are experiencing financial hardship. And remember, smaller state chartered banks and credit unions have more freedom in offsetting delinquent debts with asset accounts than major national banking institutions.
Anti-Deficiency Laws and Purchase Money Issues of Short Sales
When a homeowner pursues a short sale with loans that are exclusively purchase money, the negotiation is easier and lenders are more agreeable to the short sale. Why? Because they know that the owner is legally protected in Arizona from recourse if the home goes to foreclosure assuming it is a "qualified property" under Arizona anti-deficiency statutes. When the loan is not purchase money, for example a HELOC (Home Equity Line of Credit), it is common for the lender to require a settlement prior to releasing the lien on the property. Non-purchase money lien holders can and will continue to pursue the homeowner AFTER a foreclosure.
Foreclosure, Distressed, REO, Bank Owned Properties in Gilbert, Chandler, Mesa, Tempe, Scottsdale, Queen Creek and Gold Canyon
Bank owned properties that have been through the foreclosure process represent some of the best values in the Phoenix area. They are also known as REO or lender owned properties. Click here to request automatic updates on bank owned foreclosure or REO properties for homes in the Phoenix area including Scottsdale, Chandler, Gilbert, Mesa, Queen Creek, Tempe, Paradise Valley, Surprise, Avondale, and Goodyear.
Use the following specific searches for foreclosure properties:
Bank Owned Properties throughout the Valley
Luxury Bank Owned Homes (Over $500K)
Waterfront Bank Owned Homes
Chandler Bank Owned Properties
Queen Creek Bank Owned
Gilbert Bank Owned REO Property
Schedule a showing : If you would like to see any of the houses or properties shown in the searches, fill out the attached form. If you are looking for a specific type of foreclosure, REO, or bankowned property, describe it here and I'll find it for you.
Foreclosed, lender or bank owned, REO properties are not the same as short sales. Short sales take weeks or months to get a response by the bank. The price you see on a short sale listing most likely has not been agreed upon by the bank or lender. They want to see an offer first before indicating what price they will accept. A lender or bank will respond in 2 - 5 business days on foreclosures, and the price you see on the listing has been approved by the bank or lender, and all liens have been cleared through the foreclosure process.
Whenever a prospective buyer submits an offer on a foreclosed property they think the seller is a bank and that the bank is taking a huge loss on the property. This may not be the case: Are banks the big losers on foreclosures?
Check out this video on one way lenders are dealing with foreclosures, Bulldoze them.