Facing Foreclosure in Atlanta Georgia? You have options including a Short Sale
Posted: September 22nd, 2008
Category: Foreclosures/Short Sales, Real Estate Finance
A Short Sale may be an option
Facing foreclosure is not only a financial crisis for Atlanta homeowners, it is can also be an emotional crisis. So this is a time to take stock and examine your options with your Atlanta home.
Read Also: A Deeper Understanding of Short Sales
Why Foreclosures happen
There are several reasons why Atlanta homes go into foreclosure. Perhaps the Atlanta area home was purchased at the peak of market and just before prices started to fall. Another scenario might be that the mortgage was interest only, so no equity was built up. Or perhaps the mortgage was an ARM and now the interest rates have risen, making it difficult for the owner to handle the mortgage along with daily expenses. The reason is part of the past, and owners must now deal with the future. The first item on the agenda should be to avoid foreclosure in Atlanta.
If you can still pay your Atlanta mortgage for the foreseeable future and don’t need to sell your home, then your best bet might be to wait out the market until the Atlanta Real Estate market is more favorable for sellers.
If you are unable to pay your current Atlanta mortgage but could if refinancing was in the picture, you should negotiate with your Atlanta lender. If they decline to refinance then you should contact one of the government agencies offering assistance to homeowners who find themselves in your situation. This solution might include the agency working with your lender to strongly encourage them to refinance your home rather than foreclose.
The National Association of REALTORS® has created a useful document for homeowners in “How to Avoid Foreclosure and Keep Your House” if you are in trouble it is an excellent place to start. Some of the resources cited in this document include:
For immediate advice, call 888-995-HOPE To speak to a counselor on how to avoid foreclosure. Available in English and Spanish, 24/7. Or visit their website for more information.
The reasons your Atlanta lender might not want foreclosure is because it really represents a no-win situation for both parties. A foreclosure is expensive and takes a great deal of time, and the lender ends up with a house they really don’t want, and if it goes to auction it likely will sell for far less than it should.
Why a short sale is in your best interest.
This is a step above foreclosure. Both show up on your credit report, but the short sale is less of a black mark than a foreclosure. While foreclosure is a legal settlement where lawyers and possibly their fees are involved, a short is between you and your lender, and you will be more able to buy another Atlanta home, obtain credit cards at a better rate or even renting an Atlanta home sooner than if you had gone through foreclosure. There is also a a new tax provision that waives income tax took effect 12/20/07. The provisions excludes forgiven mortgage debt on a principal residence for the period of January 1, 2007 through January 1, 2010. Previously forgiven mortgage debt was considered the same as taxable income. Ask your CPA for further information.
Read Also: Five Tips to purchasing a Foreclosure
An Atlanta short sale is an involved process, but in a nutshell the seller needs to establish a selling price with the help of an Atlanta Realtor, find a buyer and with an offer, in hand present the offer to the mortgage holder. Along with the offer you must disclose your finances as well as a hardship letter that details why payments can no longer be made. Check with your Atlanta lending institution to see if there is other information that is required. If the offer is ultimately accepted then you have taken the first step in your financial recovery.
Read Also: What everyone should know about the housing bubble
Discussion: Comments
So you want to become an Investor with Atlanta Foreclosures…
Posted: September 12th, 2008
Category: Atlanta Real Estate, Foreclosures/Short Sales, Real Estate Finance
Atlanta Real Estate Investment Resource Foreclosures
In the past year alone, the number of Atlanta GA homes that have been foreclosed upon has increased. If you previously have been toying with the idea of getting into the Atlanta Real Estate Investment market, now is a good time to do so with the foreclosures that are happening in the area.
You may be thinking of taking advantage of the deals that can be had with the Atlanta Foreclosures. Keep in mind, though, that a lot of people have also been jumping into the fray, so you need a plan of action and ready to act when you decide to work the Atlanta Foreclosure market.
The success of your Atlanta GA real estate foreclosure business mainly hinges on the rate at which you purchase Atlanta homes at bargain prices and then turn them over for a profit. The old saying “Buy low, sell high” has never been truer.
Finding those Atlanta Real Estate Deals
To help you make good deals in the Atlanta real estate foreclosure market, below are a few tips:
- Be ready to offer a solution to the Atlanta homeowner in crisis. Atlanta houses are about to be foreclosed are facing a tough financial crisis. They are looking for solutions.
- Consider the Atlanta homeowner’s situation. There are cases when a Atlanta property may be in a less than standard condition and the homeowner’s foreclosing date is fast approaching.
- Obtain pre-approval from your Atlanta Mortgage Professional. This way you are ready to close quickly, which will be desirable to the troubled Atlanta homeowner.
- Do your homework. Ensure a good and profitable purchase of a Atlanta property by first doing your homework. Research the market, know what is and is not selling and understand successful selling strategies. Remember your goal is to ultimately turn over the Atlanta home for profit.
- Think like an Investor - Be ready to act when a deal appears, because you are not the only one looking.
Although many competitors and 1st time home buyers are entering in the Atlanta real estate foreclosure market, making a profit in the business will depend on your ability to think of this as a business and not get emotionally attached to the Atlanta homes. Your success is dependent on your ability to look at the numbers and base your decisions on the potential profit. Don’t forget that there could be repairs or other expenses that may affect your profitability. It is important to approach the Atlanta Foreclosure market well researched to be successful.
Discussion: Comments
Fannie Freddie Bailout Reviews
Posted: September 11th, 2008
Category: Real Estate Finance
Thanks to Bob at Get Home Denver for the video tip.
We all have heard about the Fannie-Freddie Bailout, but what does it mean?
Benefits of Fannie Freddie Bailout
Jeff Corbet of AgentGenius listed 5 potential benefits of the bailout:
- Lender balance sheets will be cleaned up and thinned out.
- Mortgage rates and fees should get cheaper as a result.
- Mortgage paper will be turned into Federal paper, establishing much needed confidence from foreign investors. Its a global market, keeping foreign investment money flowing through our economy is vital to its existence in 2008 (and going forward).
- Federal paper will allow borrowers to potentially ‘work out’ their delinquent loans with far more flexibility than they could with lender owned mortgage paper.
- Reduction of Wall Street volatility in what has historically been a stable segment of the bond market. Consumer confidence needs to be restored to the mortgage market, volatility and consumer confidence usually don’t coincide with each other.
Wall Street
Dan Green of The Mortgage Reports had this to say about how Wall Street views the move…
“For years, Wall Street endured Fannie Mae’s accounting issues, leadership scandals, and weak balance sheets, knowing that the mortgage group’s parent was just a cab ride away. Wall Street harbored a deep-seated belief that should things get really bad for Fannie Mae, the government would step and take over. And, that’s exactly what happened.”
Then the Wall Street Journal says intervention ain’t what it used to be:
“Government intervention is losing its market mojo.
The one-day stock rally sparked by the rescue of Fannie Mae and Freddie Mac was quickly erased Tuesday, drowned out by fresh worries about Lehman Brothers Holdings.”
Do you have any thoughts on the take over?
Discussion: Comments
Real Estate Homestead Idea
Posted: August 21st, 2008
Category: First Time Buyers, Real Estate Finance
One of my favorite real estate bloggers is The Notorious R.O.B., not just because his blog name makes me smile, but because he is one of the most thorough writers and has a very keen mind for analysis. He covers everything from MLS to NAR and lots of commercial real estate topics. I recently read one of his genius ideas about making the Homestead Act updated for the 21st century. Here are Rob’s ideas:
“Rough outline of a new Homestead Act:
* Banks surrender the property to the municipality. They can claim a loss for future tax writeoff, but importantly, they get the property off their balance sheets.
* Municipality waives all back taxes, transfer fees, etc.
* Utilities write off all water/electric bills, etc.
* Property is made available as is to any legal resident willing to live there.
* You must stay in the residence for at least five years.
* During your stay, you must maintain the house in reasonable condition and not engage in any illegal activities in the house.
* It must be your primary residence for those five years.
* You must pay all property taxes and fees associated with home ownership, such as for trash removal, water and sewage, etc.”
I doubt there is any chance in hell that these ideas are ever considered by Congress, but I think it’s a great way to make people think outside the box about real estate laws. I encourage each of you to read more from the Notorious R.O.B.
Additional Reading:
Discussion: Comments
Housing and Economic Recovery Act of 2008
Posted: August 3rd, 2008
Category: First Time Buyers, Real Estate Finance
UPDATE: Linda Dvorak commented at Agent Genius with some great clarifications of the nuances of the capital gains issue in this law. Please visit http://agentgenius.com/?p=3193#comment-16288 and read comment #41 for a great explanation. You can also visit Exeter for a detailed analysis.
The Housing and Economic Recovery Act of 2008 was recently passed and it included many positive things for buyers and sellers of real property. Many real estate bloggers have covered this topic (view blog search results), but Dan Green brought to light one of the biggest downsides to the new act.
As he found buried deep on page 690 of the 694 page law an important change to the Capital Gains Exclusion rule that could cost home sellers across the country. Dan said…
“Under the former Capital Gains Exclusion rule, home sellers could claim $250,000 of home sale profits tax-free ($500,000 if filing jointly) provided they physically lived in the home for 2 of the previous 5 years. Savvy real estate investors exploited this tax rule by moving between residences every two years.
Even “regular” homeowners were coached to stay in their homes for at least 2 years for tax reasons.
Under the new Capital Gains Exclusion rule, however, this sort of tax-minimizing behavior is rendered impractical. The new Capital Gains Exclusion formula is not an all-or-nothing proposition. Instead, it’s a ratio.
In other words, if a home seller occupied a property as a primary residence in 2 of the last 5 year, under the new system, he would be entitled to 40% of his capital gains tax-free versus 100 percent of those gains before the new housing law passed.
The effective date for the new Capital Gains Exclusion rules is January 1, 2009 so homeowners selling in 2008 are exempt. “
Here is the formula:
Here is a sample equation:
You bought a home in January 2004 and paid $500,000. This has been your primary residence until this year, January 2008, when you bought another property and moved your primary residence. Say you sell your original property next year, January 2009, for $600,000. Your capital gains formula:
1460 / 1825 = 0.80 x $100,000 = $80,000 Capital Gains Exclusion
1460(365 days x 4 years) / 1825(365 days x 1 year) = 0.80 x $100,000 ($600,000 - $500,000) = $80,000
Which means you would pay capital gains tax on $20,000. Capital Gains Tax is currently at 15%, so you would pay $3,000 in new taxes that you would have avoided prior to this new law. *Please note this does not account for the state portion of capital gains, In Georgia that would be an additional 6% of the gains or $1,200 for a total of $4,200 in taxes on the gain.
It may sound like a small number when you profit $100,000 to only pay $4200, but what happens if the new government leaders change the Capital Gains Rate? This rate has been as high as 45.5 percent in the past. This is not good for future sellers of real estate.
Discussion: Comments
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