Distressed Sales – Short Sales, NOD, NOTS, Late Mortgage Payments and Tax Defaults

Housing and Financial Crisis – Know All Your Options

The Mortgage Forgiveness Debt Relief Act (MDRA) was a government bill that offered relief to most homeowners who would normally owe taxes on forgiven debt after performing a short sale.  Under the previous US law, when debt is forgiven by a commercial lender (Bank of America, Chase, US Bank etc.), that debt would normally require the borrower to include the amount forgiven as taxable income on tax returns.  This would mean the borrower would have to pay income taxes on their forgiven debt.  When the MDRA was in place, a borrower did not have to pay income tax on forgiven debt in the most common short sale scenarios.  The Act initially became law in 2007 and expired in 2014.  Near the end of 2015 the act was re-established and later extended to the end of 2018 with pending bills to extend.  Laws and guidelines have been provisioned in California to preemptively protect California homeowners now that the MDRA has expired.

For example, if the lender forgives $50,000 of debt to the homeowner after the completion of a short sale, under traditional tax laws that $50,000 is considered income.  If your combined federal and state marginal tax rate is 25%, you would then owe $12,500 in taxes.  Under the Mortgage Forgiveness Debt Relief Act, you would have been allowed to exclude from income the discharge of debt, and therefore not have to pay taxes associated with it.

California Homeowners are Still Protected

Under California guidelines, those who perform a short sale on their primary residence are assured that no federal tax penalties will be incurred even though the Mortgage Debt Relief Act has expired.  Technically speaking, under the anti-deficiency provision of Code of Civ. Proc. 580e, the debt would be a non-recourse obligation and for federal income tax purposes the homeowner will be considered not having cancellation of debt (COD) income.  Furthermore, the California Franchise Tax Board states that distressed California homeowners who short sale are protected against any state income tax when the sale of the home is completed.

The current U.S. housing market and financial crisis have caused tremendous stress and heartache for families across America and especially California.  If you or someone you know is among the millions today affected by the prospect of foreclosure, understand that you are not alone.

Unfortunately, seven out of 10 homeowners in foreclosure proceed without the assistance or advice of real estate professionals.  Now more than ever, you need to find an advocate for you and your family’s interests, one who is prepared to handle your specific needs.

Real estate professionals with the Certified Distressed Property Expert® (CDPE) Designation have trained extensively to understand the options, solutions and effective methods to for dealing with homeowners facing hardships.  Don’t risk your financial future and the potential sale of your home with an agent who does not have all the options, solutions or expertise.

Certified Distressed Property Experts fully understand that saving a home can save a life, which can save a family, which can save a future.

What is a CDPE?     

A Certified Distressed Property Expert® is a real estate professional with specific understanding of the complex issues confronting the real estate industry, and the foreclosure avoidance options available to homeowners. Through comprehensive training and experience, CDPEs are able to provide solutions for homeowners facing hardships in today’s market, specifically short sales.

The prospect of foreclosure can be financially and emotionally devastating, and often homeowners proceed without guidance of any kind. The developers of the CDPE Designation believe that the best course of action for a homeowner in distress is to speak with a well-informed, licensed real estate professional. They have the tools needed to help homeowners find the best solution for their situation. Often, when other options have been exhausted, CDPEs can help homeowners avoid foreclosure through the efficient execution of a short sale.

While enduring financial difficulties is challenging for any family, the process of finding a qualified real estate professional should not be. Selecting an agent with the CDPE Designation ensures you are dealing with a professional trained to address your specific needs.  Our Team has completed the extensive training and has received the CDPE Designation.


Short Sale Benefits

  • Avoid Foreclosure
  • Avoid Federal Income Taxes
  • Absolutely No Cost to Homeowner
  • Costs Paid by Lender and Buyer
  • Shortages Forgiven by Lender(s)
  • Minimize Credit Damage
  • Repurchase Mortgage Waiting Period Timelines Following Hardships 
  • Stop Lender Debt Collection Calls
  • Up to $10,000 Relocation Assistance

How We Can Help

If you find yourself in a Distressed Sale – Late Mortgage Payments, Short Sale, Notice of Default (NOD), Notice of Trustee Sale (NOTS) or Tax Default situation, our team can help you navigate through the minefields involved with getting a sale approved by your lender(s).  For more information, click on Know Your Options.  We utilize professional consulting companies that are highly experienced and trained and have developed the contacts with all major bank loss mitigation departments to get short sales approved.  In fact, our team of Realtor’s and Short Sale Consultant’s have experienced a 95%+ success rate obtaining short sale approvals.

Contact our Team by E-mail at Info@SummitRealEstateGroup.net or call us at 949.305.0102 for a no obligation consultation to determine if your financial hardship and property qualify for a lender approved Short Sale or if we can find solutions to help you retain your home.  All consultations are discrete and held in the Strictest confidence.  No information is ever shared.

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