Vancouver Wa Real Estate Blog

Today, Wednesday, Feb. 25th, the Washington state Senate passed SB 5221, the Senate version of the fix to the distressed properties law, by a unanimous vote of 48- 0!  This is great news for distressed Clark County property owners

The bill’s prime sponsor, Sen. Rodney Tom, told us today after the bill passed, “It’s really important in these economic times that those sellers that find themselves in the unfortunate situation of being forced to sell their home will now have the service of Realtors to help them maneuver through a difficult selling environment to minimize a very difficult situation.”
HB 1132, the House version of the bill, passed the House unanimously last week. Both versions of the bill will now be sent to the opposite chamber (House bill to Senate, Senate bill to House) to be considered.

Crystal Boldt Foreclosures and Shortsales

Save up to $8,000 with the First-Time Home Buyer Tax Credit

The IRS has updated the tax form used to claim the First-Time Homebuyer Tax Credit that’s been increased to as much as $8,000 for buyers purchasing a home this year before Dec. 1.  This will help out the first-time home buyers in Clark County.

In 2008, nearly half of homebuyers were buying for the first time, and the expanded credit will make it easier for that group of buyers to enter the housing market this year.

IRS  Form 5405 will allow qualifying buyers to claim the credit on either their 2008 or 2009 tax returns.  The credit is equal to 10 percent of the purchase price of the home, up to a cap of $7,500 or $8,000.

For first-time homebuyers who purchased a home in 2008, the credit maxes out at $7,500, and functions like an interest-free loan — it must generally be repaid over a 15-year period.

The American Recovery and Reinvestment Act of 2009 raised the cap to $8,000 and eliminated the repayment requirement unless a home is resold within three years.

A first-time homebuyer is anyone who hasn’t owned a primary residence in the last three years, and only those who meet income limits qualify.

The credit begins phasing out for individuals with a modified adjusted gross income of more than $75,000, and for married couples earning more than $150,000 and filing jointly. Individuals making $95,000 or more and married couples earning $170,000 or more do not qualify for the credit.

Crystal Boldt General

Vancouver sellers facing foreclosure often have the option of selecting a short sale or a deed-in-lieu of foreclosure as a possible solution to their financial difficulties.  Like most alternatives, both have their upsides and their downsides.  Understanding these options is the only way to make a truly informed decision.

Select either Short Sale or Deed-in-Lieu as early on as possible

The sooner you act on either a short sale or a deed-in-lieu the better. Once the foreclosure process is activated, you will not be in a strong position to negotiate with your lender because payments, interest and penalties have piled up. They can hold you financially responsible for their losses and seek a deficiency judgment that will appear on your credit report even if you don’t have the money to pay it.  In either case, however, avoiding foreclosure is always a better choice in terms of the effect on your credit.

In a short sale, your lender takes the loss

When you decide to use a short sale to prevent foreclosure, you should understand that the sale must have the lender’s approval and that lenders don’t always agree. What the lender is doing when they accept, is permitting you to sell your home for less than you owe them and taking the loss themself. If they go along with the short sale, it will relieve you of the burden as well as the cost, emotional strain and embarrassment of a messy foreclosure procedure. On the upside, a short sale is far less destructive to your credit rating than a foreclosure, as it is supposed to be listed as a “settled debt” on your credit report.  However, it is still harmful to your credit score and can reduce it by 200 points or more.

On the downside, the lender could always go after you to collect the difference between the short sale price and what you owed them by getting a deficiency judgment against you. However, more often than not, this doesn’t happen simply because they know that there is no money to recover and that they will have to pay all the costs of the legal action.

Deed-in-lieu may be your fastest way out

A deed-in-lieu of foreclosure is when you give your home back to your lender, take your losses and thereby prevent the foreclosure. Lenders will frequently accept this because it is a less expensive and time consuming process for them than a full foreclosure action. The upside is that a deed-in- lieu is a faster solution than a short sale and that it is more likely to be acceptable to the lender.  As far as credit score is concerned… it appears about the same as a short sale.

On the downside, if the lender eventually sells the home for a price that doesn’t pay off the original mortgage amount, they can get a deficiency judgment and try to collect it from you. Once again, they probably won’t proceed if there doesn’t appear to be any money to recover.

Crystal Boldt Foreclosures and Shortsales

Every day, more people slip into the foreclosure whirlpool and spiral downward toward the day they may have to leave their home. What should you do if you are on the verge of getting a foreclosure notice?

First and foremost,  face the issue head on and prepare for days and weeks of making phone calls and corresponding with people who may be able to help.  Don’t assume it’s too late to act.   As long as you are residing in the home, you probably have some opportunity to keep your home.

People facing foreclosure have more avenues to pursue than they might realize.

Potential solutions include:

- Negotiating a modification of the loan.
- Refinancing the loan.
- Listing the home through an agent for a possible “short sale.”
- Selling the home to an investor on your own.
- Declaring bankruptcy.

Short sales-in which the lender agrees to take less than is owed on the home, writing off some or all of the loss to avoid the expense of a foreclosure-typically are handled by real estate agents, which at least takes some of the pressure off of  the homeowner.

Yes, it seems the banks are just not moving fast enough. They are sitting on these, and it’s outrageous.  Though the process can be slow and frustrating, many professional real estate agents are working more short sales these days and have buyers lined up looking for bargains, .

Crystal Boldt Foreclosures and Shortsales