Harvey Realty, Inc.

Homeowners ought to consider thoughtfully the consequences of a short sale prior to starting down that path. Whether or not a particular homeowner would be best served by a short sale verses foreclosure is a decision that should be made in conjunction with the guidance and advice of legal, financial, and tax professionals.

The real estate professional may provide information with respect to the options available, but the next step for the homeowner is to consult with the appropriate professional.

Some of the consequences may include, but are not limited to:

(i) tax consequences, which may result from a "full discharge or forgiveness of debt." While there are exceptions, this is a matter to be carefully evaluated;

(ii) short sales impact credit scores - how much or how little is something that cannot be easily answered nor should it be part of a real estate professional's dialogue with the homeowner. www.fico.com provides some guidance regarding this issue, but referring homeowners to their tax, financial, and legal advisors, in writing, remains a sound business practice.

In California, SB 931 (Ducheny), effective January 1, 2011, bans first lien holders from pursuing a deficiency judgment after agreeing to a short sale. In addition, SB 458 (Corbett) was signed into law on July 15, 2011. Because it was an "Urgency Bill," it became effective on that date. This law expands the protection offered under SB 931 to all lien holders who agree to a short sale. It is important to note that in the event of Fraud or Waste the protection is lost. Furthermore, if the mortgagor is a Limited Liability Company, Limited Liability Partnership or Corporation, the law does not apply.

There are many factors to consider. Carefully analyzing the risk verses reward factors in advance makes for sound decision making.

OK, so where is the market headed?...I have no idea. But I'm very concerned about the 14 point whatever trillion dollar debt our nation has accumulated. If Congress doesn't come up with a plan soon there is a good chance our government bond ratings will be drop by 50 percentage points. That's bad news for investment $.

So let's see how our elected officials play out the politics while trying to keep the best interest of the country in mind...speaking of interest, rates are rock bottom and I only see them going up if history repeats itself...

So if you can afford to buy, now seems to be a good time. If you are going to sell, don't unless you either have to or you plan to purchase something else...because it's all relative. Sell low, buy low.

California short sellers to pay tax on mortgage debt
Governor Schwarzenegger last week vetoed a bill that would have prevented California homeowners who sold their homes via short sales or received loan modifications in 2009 from being taxed on the forgiven mortgage debt. Schwarzenegger vetoed the bill, which would have aligned much of the state’s tax code with that of the federal government’s, because it contained an unrelated provision regarding tax refunds for the state’s largest businesses. Although the governor vetoed this particular bill, he expressed his support for banning taxation of forgiven mortgage debt, and immediately called for the legislature to send him a bill to provide tax forgiveness prior to the April 15 tax-filing deadline.

The California Association of Realtors currently is supporting two stand-alone measures, AB 1779 (Niello) and SB 14 (R. Calderon and L. Correa) of the Sixth Extraordinary Session, that would fully conform to the federal rule extending "phantom" income debt forgiveness through December 31, 2012.

Effective immediately, if a project has been previously FHA approved, the lender must certify that it has no knowledge of circumstances or conditions that might have an adverse effect on the project or cause a mortgage secured by a unit in the project to become delinquent.

Lender to Obtain a completed HOA Questionnaire to determine that the project is still in compliance with the following:

· Investor ownership: No more than 10% of the units may be owned by one investor.

· HOA Dues: No more than 15% of the total units be in arrears (no more than 30 days past due.)

· Owner Occupancy Rate: At least 50% must be owner occupied.

· FHA loan Concentration Rate: No more than 50% concentration level (for cases assigned through December 31, 2010). See the concentration level when you pull the FHA Approved Condo list.

· No Pending special assessments.

· No Pending legal action against the condominium association, or its officers.

Obtain a “walls in” coverage policy (HO-6 policy) if the master policy does not include interior unit coverage.

Affordable home prices, tax credits for home buyers, historically low interest rates, and a large number of distressed properties prompted many first-time home buyers to enter the market in 2009, according to California Association of Realtor's 2009-2010 “State of the California Housing Market” report released today.

California’s median home price hit bottom in February 2009 at $245,170. Since then, the median home price has increased steadily in month-to-month comparisons, but remained below 2008 levels throughout 2009. The annual median price is projected to increase to $280,000 in 2010 from $271,000 in 2009.

Homes priced $500,000 or less dominated the sales mix throughout 2008 and early 2009, but peaked at 85 percent in January 2009. Meanwhile, the market share of homes sold for more than $500,000 increased from 15 percent in January 2009 to 25 percent in July 2009, holding steady around that figure for the remainder of last year.