Real Estate News

This means those under foreclosure or distressed mortgage default, there will be a federal income tax bill on the way…or is it?

How to Avoid Taxes on Canceled Mortgage Debt… This can also apply to debt that is discharged in 2018 provided that there was a written agreement entered into in 2017.

Update 3-26-2018:

NAR: Debt Forgiveness Should be Permanent Part of Tax Code . The ACT expired in 2017, but early this year (2018) it was extended retroactively to cover the previous year (2017). Barry Grooms, 2018 vice president of Florida Realtors®, testified on behalf of NAR. He told committee members, “The exclusion for mortgage debt cancellation delivers a huge dose of fairness. When the investment in a home goes well, and the owner sells at a gain, the tax code generously waives capital gains up to $500,000. But what happens when things go sour, equity is lost and the family is forced to sell short? Up through last year, the exclusion stepped in and relieved the often-impossible tax burden. If allowed to expire, we are left with a tax policy that rewards good fortune but piles on when the tables are turned.” He added, “This is neither fair nor smart.”
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As of the date of this post (about 234,508 U.S. properties were reported to be foreclosed in the first quarter of 2017)- it no longer is in effect for 2017 and beyond. As of December 18, 2015, President Obama has extended the expiration date of this law through December 31, 2016. This is bad news for the many homeowners who are suffering through foreclosures in 2017 and beyond, unless of course if US Congress receives pressure to extend the deadline once again.

Generally, mortgage debt which has been written of or forgiven through short sales or foreclosures is considered income and taxable to taxpayers. This US Congressional Act allows taxpayers to exclude income from the discharge of debt on their principal residence under certain circumstances outlined in IRS Publications #4681. The lender is usually required to report the amount of the canceled debt to you and the IRS on a Form 1099-C, Cancellation of Debt.

1-13-2015: This act has been extended for all those individuals who had debt cancelled under IRS guidelines in 2014.

11-16-2014: Ok, this as extended to those in 2013, but it is not effective for anyone who experienced a distressed home sale in 2014 – will you write your US Congressional Representative to appeal the extension to those in 2014?

According to the IRS, your mortgage debt is partly or entirely forgiven during tax years 2007 through 2012 – see 10 facts about debt forgiveness at the IRS website.

Note: I believe it has been extended to 2013, but not beyond – unless Congress acts on it – but since they haven’t even agreed on a budget, let’s not hold our breaths on this one that really matter to people.

The MFDRA is effective for mortgage debt canceled between 2007 and 2012. Forgiven debt does not qualify as income if the mortgage was to purchase, repair or build on the borrower’s primary residence. The forgiven debt must have been part of a mortgage restructuring or cancellation of debt following a foreclosure. Individuals are limited in this time period to $2 million of exemption and married couples filing separately are limited to $1 million each. The forgiven debt and the reason for exemption must still be filed on tax returns.

Forgiven debt qualifying as income for the IRS includes short sales on real estate. Bank foreclosures on real property may also qualify if the property later sells for less than the amount owed on the loan.

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Is your time almost up? It expired in 2013, so will it be renewed in 2014? Source: http://www.johnhartrealestate.com/blog/2013/09/mortgage-forgiveness-debt-relief-act-expiration-all-good-things-must-come-to-an-end/

According to the IRS, your mortgage debt (on your primary personal residence) is partly or entirely forgiven during tax years 2007 through 2012 – see 10 facts about debt forgiveness at the IRS website.

Note: I think this law has been extended to cover through December 2013, but verify with the IRS…

The Act is about to expire. Do you think Congress will extend the time period covering the Act, or let it expire? Source: IRS Publication 4681, Canceled Debts, Foreclosures, Repossessions and Abandonments for more information regarding the income tax treatment of forgiven debt.

See IRS Publication 4681, Canceled Debts, Foreclosures, Repossessions and Abandonments for more information regarding the income tax treatment of forgiven debt.

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them. I welcome any or all comments that would help others.

The Office of Inspector General in the Department of Labor raised some Significant Concerns such as:

Protecting the Safety and Health of Workers: OIG is concerned with OSHA’s ability to best target its compliance activities to those areas where they can have the greatest impact. OSHA must strive to target the most egregious and persistent violators and protect the most vulnerable worker populations

Ensuring the Effectiveness of the Job Corps Program: ability to provide safe residential and nonresidential education and training programs that truly assist at-risk, disadvantaged youth (ages 16 to 24) in turning their lives around. Concern for challenge the program faces in obtaining and documenting desired program outcomes, including
placing students in training-related employment. Also of concern for the OIG are administrative and financial management weaknesses and, in particular, recent budget overruns.

US OIG reports $5.6 Billion Unemployment Insurance waste due to claimants who returned to work & still got benefits.

Securing and Protecting Information Management Systems: Recent OIG audits have identified deficiencies in configuration management, account management, and vulnerability management, as well as security and access control weaknesses in key departmental financial and support systems.

Department of Labor has not always properly categorized significant IT investments to ensure that they received the level of oversight that projects of their estimated cost should receive.

During the reporting period April 1 through September 30, 2014, the OIG Hotline received a total of 1,498 contacts. Of these, 320 were referred for further review and/or action.

Office of Inspector General – Report Fraud, Waste, and Abuse – Call the Hotline
202-693-6999 or 800-347-3756
E-mail: hotline@oig.dol.gov
Fax: 202-693-7020

Source: 2014 Semiannual report to US Congress by DOL – OIG

Who really knows what will happen in 2015…nobody expected to start 2015 with interest rates below 4%, but they did…and several “experts” predicted real estate rebounds and yet the economy remains sluggish and normal young home buyers still can’t find decent enough employment to make enough to buy a home….good choice of inventory remains missing…and can’t wait until the investors who bought massive number of homes decide to sell them and turn profit as soon as home buyers return to the market and good updated inventory remains low.

There are plenty of predictions floating around for residential real estate in 2015 – here are only a handful and often somewhat redundant:

Important real estate trends for 2015 – Typically, first-time buyers make up about 40% of home purchases and 2014 was the lowest participation rate in history…this year ought to be a litter better. Also, home prices are rising which means a falling average earnings level will result in lower affordability for home buyers. Source: Capital Gazette article

Five Things To Watch In Housing In 2015 (Affordable Homes; Available Mortgages; Low Interest Rates; Adequate Inventory; and New Home Construction)…Source: WSJ Blog

What’s ahead in 2015 – Millennials getting jobs? Interest rates, inventory and price appreciation? Econmomic stability? Source: San Diego news

Will 2015 Be Better Or Worse For Real Estate? Young people are having trouble finding jobs and affordable housing in areas they want to live.

Five (5) Predictions for Real Estate in 2015 from HomeVestors (Inventory meets Pent Up Demand-First Timers- Inventory-Loans availability)

Five real estate trends to watch in 2015 (Buyer’s Market; Mortgage Rates; Credit; Local Markets; and Gas Prices)

Real Estate Forecast for 2015 (more first timers-more new housing) – Housing market will be better – return of first-time buyers – increasing new home construction and existing homes – home-price appreciation.

Foreclosures are down 68 percent since the height of the crisis and recoveries to the Fund have improved 68 percent from their lowest level.

FHA’s mortgage insurance fund’s overall Economic Net Worth has improved by $6.1 billion from a negative balance to a positive $4.8 Billion balance in 2014, but is it sufficient enough to withstand another significant downturn or increase in foreclosures?

The economic value of the HECM portfolio deteriorated from positive $6.5 billion to negative $1.2 billion…possible future bailout issues?

Continued focus on aggressive loss mitigation and recovery actions…which are the subject of some HUD OIG audit reports.

Total number of FHA mortgages in 2014 was 7.7 million.

Read this link for full report: http://portal.hud.gov/hudportal/documents/huddoc?id=FY2014FHAAnnRep11_17_14.pdf

That depends on if you are a “customer” or “client”.

The customer relationship with an agent/broker limits the amount and type of information they can furnish.

The client relationship with an agent/broker gives you much more help and information allowed to be revealed for you to make an informed decision.

There are state laws called the Official Code of Georgia (O.C.G.A.) which outline the duties of a real estate toward a “customer” or “client”, depending on your relationship with the agent. http://law.justia.com/codes/georgia/2010/title-10/chapter-6a/

(8) “Customer” means a person who is not being represented by a real estate broker in an agency capacity pursuant to a brokerage engagement but for whom a broker may perform “ministerial acts” in a real estate transaction pursuant to either a verbal or written agreement. But a “client” gains further protection, demands, responsibilities, and actual representation as an agent.

(12) “Ministerial acts” means those acts described in Code Section 10-6A-14 and such other acts which do not require the exercise of the broker’s or the broker’s affiliated licensee’s professional judgment or skill.

O.C.G.A. 10-6A-4. Broker’s legal relationship to customers or clients

(a) A broker who performs brokerage services for a client or customer shall owe the client or customer only the duties and obligations set forth in this chapter, unless the parties expressly agree otherwise in a writing signed by the parties. A broker shall not be deemed to have a fiduciary relationship with any party or fiduciary obligations to any party but shall only be responsible for exercising reasonable care in the discharge of its specified duties as provided in this chapter and, in the case of a client, as specified in the brokerage engagement.

(b) Whenever a broker with an existing brokerage relationship with either a customer or a client enters into a new brokerage relationship with the customer or client, the broker shall timely disclose that fact and the new brokerage relationship to all brokers, customers, or clients involved in the contemplated real estate transaction.

Disclaimer: These codes may not be the most recent version. Georgia may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.

O.C.G.A. 10-6A-7 Duties of broker engaged by buyer

(a) A broker engaged by a buyer shall:

(1) Perform the terms of the brokerage engagement made with the buyer;

(2) Promote the interests of the buyer by:

(A) Seeking a property at a price and terms acceptable to the buyer; provided, however, the broker shall not be obligated to seek other properties for the buyer while the buyer is a party to a contract to purchase property, unless the brokerage engagement so provides;

(B) Timely presenting all offers to and from the buyer, even when the buyer is a party to a contract to purchase property;

(C) Disclosing to the buyer adverse material facts of which the broker has actual knowledge concerning the transaction;

(D) Advising the buyer to obtain expert advice as to material matters which are beyond the expertise of the broker; and

(E) Timely accounting for all money and property received in which the buyer has or may have an interest;

(3) Exercise ordinary skill and care in performing the duties set forth in this subsection and such other duties as may be agreed to by the parties;

(4) Comply with all requirements of this chapter and all applicable statutes and regulations, including but not limited to fair housing and civil rights statutes; and

(5) Keep confidential all information received by the broker during the course of the engagement which is made confidential by an express request or instruction from the buyer unless the buyer permits such disclosure by subsequent word or conduct, or such disclosure is required by law; provided, however, that disclosures between a broker and any of the broker’s affiliated licensees assisting the broker in representing the buyer shall not be deemed to breach the duty of confidentiality described above.

(b) A broker engaged by a buyer shall timely disclose to a prospective seller with whom the broker is working as a customer and who is selling property which will be financed either by a loan assumption or by the seller’s providing a part or all of the financing all material adverse facts actually known by the broker concerning the buyer’s financial ability to perform the terms of the sale and, in the case of a residential transaction, the buyer’s intent to occupy the property as a principal residence. Brokers shall not knowingly give prospective sellers false information; provided, however, that a broker shall not be liable to a seller for providing false information to the seller if the broker did not have actual knowledge that the information was false and discloses to the seller the source of the information. Nothing in this subsection shall limit the obligation of the prospective buyer under any applicable law to disclose to the prospective seller all adverse material facts actually known by the buyer concerning the buyer’s financial ability to perform the terms of the sale and, in the case of a residential transaction, the buyer’s intent to occupy the property as a principal residence. No cause of action shall arise on behalf of any person against a broker for revealing information in compliance with this subsection. Violations of this subsection shall not create liability on the part of the broker absent a finding of fraud on the part of the broker.

(c) A broker engaged by a buyer in a real estate transaction may provide assistance to the seller by performing ministerial acts of the type described in Code Section 10-6A-14; and performing such ministerial acts shall not be construed to violate the broker’s brokerage engagement with the buyer nor shall performing such ministerial acts for the seller be construed to form a brokerage engagement with the seller.

(d) A broker engaged by a buyer does not breach any duty or obligation by showing properties in which the buyer is interested to other prospective buyers.
Disclaimer: These codes may not be the most recent version. Georgia may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.

The Financial Stability Board (FSB) was established in April 2009 as the successor to the Financial Stability Forum (FSF).

The Group of Twenty (G20) endorsed the FSB’s original Charter of 25 September 2009 which set out the FSB’s objectives and mandate, and organisational structure. The FSB has assumed a key role in promoting the reform of international financial regulation. Policies agreed by the FSB are not legally binding, nor are they intended to replace the normal national and regional regulatory process. Instead, the FSB acts as a coordinating body, to drive forward the policy agenda to strengthen financial stability. It operates by moral suasion and peer pressure, to set internationally agreed policies and minimum standards that its members commit to implement at national level.

The FSB’s charter (as a not-for-profit association under Swiss law with its seat in Basel, Switzerland) reinforces certain elements of its mandate, including its role in standard setting and in promoting Members’ implementation of international standards and agreed G20 and FSB commitments and policy recommendations.

The FSF (first convened in April 1999 in Washington, DC) was designed to bring together:

• national authorities responsible for financial stability in significant international financial centres, namely treasuries, central banks, and supervisory agencies;
• sector-specific international groupings of regulators and supervisors engaged in developing standards and codes of good practice; international financial institutions charged with surveillance of domestic and international financial systems and monitoring and fostering implementation of standard;
• committees of central bank experts concerned with market infrastructure and functioning.

In November 2008, the Leaders of the G20 countries (G20 membership comprises a mix of the world’s largest advanced and emerging economies, representing about two-thirds of the world’s population, 85 per cent of global gross domestic product and over 75 per cent of global trade.) called for a larger membership of the FSF. A broad consensus emerged in the following months towards placing the FSF on stronger institutional ground with an expanded membership – to strengthen its effectiveness as a mechanism for national authorities, standard setting bodies and international financial institutions to address vulnerabilities and to develop and implement strong regulatory, supervisory and other policies in the interest of financial stability.

As announced in the G20 Leaders Summit of April 2009, the expanded FSF was re-established as the Financial Stability Board (FSB) with a broadened mandate to promote financial stability.

These ideas were mentioned a Wall Street Journal article in the 11-7-2014 issue on page M10:

A couple who can’t come to resolution to stay married and decides to divorce may need to sell their home to settle the mortgage debt unless one or the other can purchase their interest in the home, agree to continue to pay for the mortgage even if not living there, or refinance.

The income or credit situation of either spouse may be strained but before the final divorce settlement is signed, the spouse planning to refinance should first ask a lender to run a credit check and perhaps enable a real estate attorney to perform a title search to ensure there are no liens or other encumbrances that may stall the refinance. You may also explore conventional, low down payment, and non-qualified mortgage loans to see which option works best for your situation.

Also, even though a “quit-claim” deed is necessary to legally remove the spouse’s name from title to the property, if done wrong or any liens exist may complicate the transfer. Therefore, you should consult a real estate attorney to process legal property title transfer and advise each spouse on resulting issues that may not be known.

And a good financial advisor may be useful to advise each spouse on their income, assets, and future financial position after their divorce is settled.

Why are there so many organizations involved in Transportation – for the money!

Recently, the Federal Highway Administration approved the Atlanta Transportation Improvement Plan which includes the $1 Billion planned expenditure to improve the I-285 & GA 400 interchange which is a bottleneck to traffic. The project will involve ramps, collector and distributor lanes (i.e., adjacent access lanes with more stoplights).

Organizations involved in this, besides CW Matthews and other contractors:

Georgia General Assembly (and don’t forget the local Governmental bodies)
Georgia Department of Transportation
Atlanta Metropolitan Planning Organization
Atlanta Regional Commission
Georgia Regional Transportation Authority
Perimeter Community Improvement Districts

Hey – what about the City of Atlanta – will they receive more traffic from Southbound Lanes?

How about all roads north of I-285 – won’t they also get more traffic faster?

I see cost overruns and cluster messes ahead….

NO. The RESPA statute and regulations do not require the lender to maintain a cushion. However, since 1976 the RESPA statute has allowed lenders to maintain a cushion equal to one-sixth of the total amount of items paid out of the account, or approximately two months of escrow payments. If state law or mortgage documents allow for a lesser amount, the lesser amount prevails.

The accounting method generally requires borrowers to maintain lesser amount in the account than the single-item method predominately used by lenders. However, many lenders have recently increased the escrow account cushion to the maximum allowed by law.

The regulations require lenders to reduce the size of the cushion in some accounts. Unfortunately, to avoid customer disapproval, some lenders may be giving their customers the impression that the HUD regulations require them to make this increase. This is a false impression. The lender, not HUD, has chosen to increase the cushion.

Source: http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/ramh/res/respafaq#TEM

The new Good Faith Estimate (GFE) to be used starting August 15, 2015 will be a 3 page form that includes the estimated costs you’ll have to pay for the home loan. The Good Faith Estimate provides you with basic information about the loan, which will help you:

• Compare offers
• Understand the real cost of the loan
• Make an informed decision about your loan choice

The lender or the mortgage broker must provide you with a GFE within three business days of receiving your application or other required information.

Important note from the CFPB: You don’t have to take the mortgage loan even if you receive a GFE. The lender also doesn’t have to give you the loan even if it provides a GFE.

The CFPB provides information and answers questions about the new GFE here: http://www.consumerfinance.gov/askcfpb/146/what-is-a-good-faith-estimate-what-is-a-gfe.html

…Now, to be perfectly fair about the new GFE…it might not last long..I’ve heard strong rumor that the old format that splits out and details each charge aligned with the HUD-1 Settlement Statement is more clear and easier to tie back to the HUD-1…so let’s go forward before we go backward.