Paying rent during a short sale… do I stay or do I go…

If there was ever a time when advice was needed about what to do with your money during a short sale, this would be the perfect question. “Do I move out of my house and rent a home while I short sale my primary residence?”

Take a read on this article written by Benny Kass, a practicing attorney in Washington.

DEAR BENNY: I live in a duplex that has recently been listed as a short sale. Since it appears that my landlord has not been making the mortgage payments, what should I do with my rent payments? I have not been contacted by the landlord or the listing agent, so I’m not sure what I should do. Any suggestions? –Chris

DEAR CHRIS: I know it is tempting not to pay your monthly rent, but even though your landlord is not paying his mortgage (or at least that is what you suspect), and even though the property is being considered for a short sale, your landlord is still your landlord.

You are living in the apartment, and are legally obligated to pay your rent. What the landlord does with your money is his business.

More importantly, if the short sale does not happen, and the lender decides to foreclose on the property, there is a new law that can protect you. Congress passed the “Protecting Tenants at Foreclosure Act,” which became effective on May 20, 2009. According to the law, a “bona fide” tenant in a foreclosed property has the absolute right to remain in the house for a minimum of 90 days. Note that if your state law provides a longer period of time, state law will apply.

But in my opinion, if you are not paying your rent, you may not be considered a “bona fide” tenant and may not be able to take advantage of this new law.

DEAR BENNY: We have a rental home and would like to exchange it for a rental home in another part of the state. What length of time does the new house have to be rented before we could move into it? My husband’s mother (age 90) who is still living independently in another state will be moving in with us when we make the move. She is getting frailer and needs to move to a place without stairs. I need a knee replacement and also need a house without stairs, and the new property meets our needs. Do these medical problems affect the timing? –Kathy

DEAR KATHY: I am afraid that these medical issues are not relevant in an exchange. The current property is called the relinquished property and the new one is called the replacement property. Section 1031 of the Internal Revenue Code allows taxpayers to exchange one investment property for another. If done correctly, any capital gains tax that would normally have been paid when the relinquished house was sold is deferred to a future time. The technical term is that the tax basis of the relinquished property becomes the basis of the replacement property. This is known as a “like-kind” or “Starker” exchange.

The rules are quite strict, and must be followed without exception. In your situation, you will have to rent out the replacement house for a minimum of one year, or at least make good-faith efforts to rent it.

The Internal Revenue Service generally follows what is called the “old and cold rule.” In other words, if at least one year has elapsed from the time you obtained the replacement property, so long as you have followed all of the 1031 requirements, you can move into that property at the end of one complete year.

The rules involving Starker exchanges are complex; you must consult with a tax attorney before you go down that path.

8.29 Million in Sales – Want to work for Slavens Realty

IRS TO EXPEDITE TAX LIEN RELIEF FOR HOMEOWNERS

The Internal Revenue Service (IRS) recently announced it will expedite its process of providing relief from federal tax liens for distressed homeowners. With over one million current federal tax liens against real and personal property, the IRS announcement should help REALTORS® and their clients resolve federal tax lien issues in their sale and loan transactions.

As background, a homeowner seeking to sell or refinance a property must generally pay off an existing federal tax lien. However, during the current economic downturn, many homeowners don’t have the cash or equity to do so. Hence, for a refinance, the homeowner may request that the IRS makes its tax lien subordinate or secondary to the lien of the refinancing lender. For a sale, the homeowner may, under certain circumstances, request that the IRS discharge its claim. The IRS’s processing time for subordination or discharge requests has been about 30 days. The IRS is currently working to expedite that time frame to help distressed homeowners. For IRS instructions on requesting relief from federal tax liens, go to the IRS Publication 783 for discharges and Publication 784 for subordinations at www.irs.gov.

Copyright © 2009 CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.)

REALTOR and Sr Mortgage Consultant

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Mortgage rates fall; Unemployment data still weak

Looks like another mad rush for borrowers desperate to refinance to a lower interest rate.

With the banks still not cooperating and denying modifications, borrowers are left with little or no choice but to foreclose and go into bankruptcy.

Having been in the Real Estate industry for some time now, I’ve begged my clients time and time again to consult with a Real Estate attorney if none of the tradtional methods work in their favor. Instead most prefer to wait to the bitter end and face the music then.

Anyone reading this blog, please do yourself a favor – prepare, take notes, learn the facts and take action before the bank takes action on you. Don’t jump on the next wave of refinancing only to find that you still can’t afford to make the payments.

For those of you who have families with children, it’s a no brainer. Don’t put yourself into a situation where you have no money to even put food on your table.

Thinking of all your out there. Be safe and have a blessed Christmas and New Year.

Source – Mortgage rates fall

http://news.moneycentral.msn.com/provider/providerarticle.aspx?feed=AP&date=20081218&id=9139901

Holly Leano – REALTOR and Sr Mortgage Consultant

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Guess what!! You could have oil in your backyard!!

Dear Buyers,

Guess what!! You could have oil in your backyard.

How will you know if you are the ‘oh so privileged one’ to have the honor of ‘drill baby drill’ in your own backyard?? Well, when you buy a home, be sure that the Seller provides you with a Natural Hazard Disclosures. JCP-LGS Disclosures.com and First American Natural Hazard Disclosures (FANHD) are sending this Disclosure Alert to keep you informed of important information regarding environmental hazard disclosures. These disclosures are based on a 1/4-mile radius around the property. If the property you are buying has O&G (O&G Wells) or if your neighbor has O&G, you’ll know. This Public Record is the statewide well database maintained by the California Department of Conservation. Each well found in the search is listed along with its well-identification number, well owner, well status, and State contact information.

It is important to note that these disclosures are not mandated regardless how significant these environmental issues are at this time. Currently, California ranks fourth in the nation among oil producing states, and nearly 200,000 wells are distributed among 45 of California’s 58 counties.

O&G well proximity is an important material fact in a residential transaction. Potential hazards associated with wells include, but are not limited to, soil and groundwater contamination, methane seeps, fire hazards, air quality issues, and physical safety concerns. In addition, a land owner may be financially responsible for the cost of plugging a well that was not safely abandoned by a previous owner.

Source – Visit the link below to view a sample of the new O&G Well disclosure:
http://www.disclosures.com/Portals/0/fanhd/pdf/OandGwell_disclosure_SAMPLE.pdf

Holly Leano – REALTOR and Sr Mortgage Consultant

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