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Mike Pahua
Nationally Certified Short Sale Realtor (NAR-SFR)
(949) 309-2400 office
 



CA SHORT SALE LAW UPDATES:

01/02/2013:  Mortgage Forgiveness Debt Relief Act of 2007 (Extension)  
****(Expires 12/31/2013)****

You may not have to claim income from forgiven debt after a short sale.

Struggling homeowners who are considering a short sale or modification will be eligible for tax relief in 2013.

The “fiscal cliff bill” passed by Congress on January 1 included a provision to exclude borrowers from paying taxes on debt forgiven through a short sale, foreclosure, or loan modification.

Known as the Mortgage Debt Relief Act of 2007, the act was scheduled to expire December 31, 2012, but received an extension for another year. Source: DSNews.com



7/12/2012: "HOMEOWNER BILL OF RIGHTS" BECOMES LAW

 

All eyes in the nation now turn to California as Governor Jerry Brown signed into law today the Homeowner Bill of Rights to help struggling Californians keep their homes. This law aims to avoid foreclosure where possible to help stabilize California's housing market and prevent the other negative effects of foreclosures on families, communities, and the economy. The new law will generally prohibit lenders from engaging in dual tracking, require a single point of contact for borrowers seeking foreclosure prevention alternatives, provide borrowers with certain safeguards during the foreclosure process, and provide borrowers with the right to sue lenders for material violations of this law.

The following is a summary of the key provisions of the Homeowner Bill of Rights that may affect California's REALTORS® and their clients. The full text of this law, also known as Assembly Bill 278 and Senate Bill 900, is available at www.leginfo.ca.gov.

Applicability of the Law: This law will generally come into effect on January 1, 2013. It only pertains to first trust deeds secured by owner-occupied properties with one-to-four residential units, unless otherwise indicated below. "Owner-occupied" means the property is the principal residence of the borrower and secured by a loan made for personal, family, or household purposes (CC 2924.15). A "borrower" under this law must generally be a natural person and potentially eligible for a foreclosure prevention alternative program offered by the mortgage servicer, but not someone who has filed bankruptcy, surrendered the secured property, or contracted with an organization primarily engaged in the business of advising people how to extend the foreclosure process and avoid their contractual obligations (CC 2920.5(c)). A "foreclosure prevention alternative" is defined as a first lien loan modification or another available loss mitigation option, including short sales (CC 2920.5(b)). Some of the requirements of this law do not apply to "smaller banks" that, during the preceding annual reporting period, foreclosed on 175 or fewer properties with one-to-four residential units (CC 2924.18(b)).


No Dual Tracking During Short Sale: A mortgage servicer or lender cannot record a notice of default or notice of sale, or conduct a trustee's sale, if a foreclosure prevention alternative has been approved in writing by all parties (e.g., first lien investor, junior lienholder, and mortgage insurer as applicable), and proof of funds or financing has been provided to the servicer. This requirement expires on January 1, 2018. Effective January 1, 2018, a lender or mortgage servicer cannot record a notice of sale or conduct a trustee's sale if the borrower's complete application for a foreclosure prevention alternative is pending, and until the borrower has been given a written determination by the mortgage servicer. Smaller banks are only covered by the requirements taking effect in 2018. CC 2924.11.


Cancelling a Pending Trustee's Sale: A mortgage servicer must rescind or cancel any pending trustee's sale if a short sale has been approved by all parties  (e.g., first lien investor, junior lienholder, and mortgage insurer as applicable), and proof of funds or financing has been provided to the lender or authorized agent. For other types of foreclosure prevention alternatives, a lender must record a rescission of a notice of default or cancel a pending trustee's sale if a borrower executes a permanent foreclosure prevention alternative. These requirements do not apply to smaller banks, and will sunset on January 1, 2018. CC 2924.11.


Providing a Single Point of Contact: For a borrower requesting a foreclosure prevention alternative, the mortgage servicer must, upon the borrower's request, promptly establish and provide a direct means of communication with a single point of contact. The single point of contact must remain assigned to the borrower's account until all loss mitigation options offered by the mortgage servicer are exhausted or the borrower's account becomes current. The single point of contact must be an individual or team responsible for, among other things, coordinating the application for the foreclosure prevention alternative, giving timely and accurate status reports, having access to those with the ability and authority to stop foreclosure proceedings, and referring the borrower to a supervisor if any upon the borrower's request. Each team member must be knowledgeable about a borrower's situation and current status in the foreclosure alternatives process. These requirements do not apply to smaller banks as defined. CC 2923.7.

Brought to you by the CALIFORNIA ASSOCIATION OF REALTORS®.


7/15/2011:  NO DEFICIENCY JUDGEMENTS ALLOWED ON JUNIOR LIENS

Gov. Jerry Brown signed SB 458 (Corbett) into law.   SB 458 extends the protections of SB 931 (2010), to ensure that any lender that agrees to a short sale must accept the agreed upon short sale payment as payment in full of the outstanding balance of all loans.

Under previous law (SB 931 of 2010), a first mortgage holder could accept an agreed-upon short sale payment as full payment for the outstanding balance of the loan, but unfortunately, the rule did not apply to junior lien holders. SB 458 extends the protections of SB 931 to junior liens.

The signing of this bill is a victory for California homeowners who have been forced to short sell their home only to find that the lender will pursue them after the short sale closes, and demand an additional payment to subsidize the difference. SB 458 brings closure and certainty to the short sale process and ensures that once a lender has agreed to accept a short sale payment on a property, all lienholders – those in first position and in junior positions – will consider the outstanding balance as paid in full and the homeowner will not be held responsible for any additional payments on the property.

SB 458 contains an urgency clause making it effective upon signing.
 
1/1/2011:  NO DEFICIENCY JUDGEMENTS ALLOWED ON ALL 1ST LIENS IN CA. 
Senate Bill 931 (SB 931) pertaining to California short sale  deficiencies was signed by the Governor on September 30th. Beginning January 1st, 2011 any first mortgages that accept a short sale will not be able to obtain a deficiency judgment against a seller after the completion of a short sale .  If a lender provides written consent to a short sale on a first mortgage, they lender must accept the sales proceeds as full payment and discharge the remaining balance due on the loan.  The new law will apply to all first mortgage loans secured by one to four residential units, including purchase money, hard money and refinanced loans.   This law does not apply to 2nd or any other junior lien holders.  Also, the new law does not prevent the lender from seeking damages for fraud or waste by the borrower.
 
2007:  Mortgage Forgiveness Debt Relief Act of 2007 
You may not have to claim income from forgiven debt after a short sale.

If you are a homeowner whose mortgage debt is partly or entirely forgiven during tax years 2007 through 2012, you may be able to claim special tax relief and exclude the debt forgiven from your income.

Here are 10 facts the IRS wants you to know about Mortgage Debt Forgiveness (Taken From IRS.gov).

   1.  Normally, debt forgiveness results in taxable income. However, under the Mortgage Forgiveness Debt Relief Act of 2007, you may be able to exclude up to $2 million of debt forgiven on your principal residence.

   2.  The limit is $1 million for a married person filing a separate return.

   3.  You may exclude debt reduced through mortgage restructuring, as well as mortgage debt forgiven in a foreclosure.

   4.  To qualify, the debt must have been used to buy, build or substantially improve your principal residence and be secured by that residence.

   5.  Refinanced debt proceeds used for the purpose of substantially improving your principal residence also qualify for the exclusion.

   6.  Proceeds of refinanced debt used for other purposes – for example, to pay off credit card debt – do not qualify for the exclusion.

   7.   If you qualify, claim the special exclusion by filling out Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness, and attach it to your federal income tax return for the tax year in which the qualified debt was forgiven.

   8.  Debt forgiven on second homes, rental property, business property, credit cards or car loans do not qualify for the tax relief provision. In some cases, however, other tax relief provisions – such as insolvency – may be applicable. IRS Form 982 provides more details about these provisions.

   9.  If your debt is reduced or eliminated you normally will receive a year-end statement, Form 1099-C, Cancellation of Debt, from your lender. By law, this form must show the amount of debt forgiven and the fair market value of any property foreclosed.

   10.  Examine the Form 1099-C carefully. Notify the lender immediately if any of the information shown is incorrect. You should pay particular attention to the amount of debt forgiven in Box 2 as well as the value listed for your home in Box 7.
The Short Sale Services I offer:

 

  • Attorney negotiated short sale service at no cost to homeowner.
  • Free, confidential, and no obligation consultation at your home or my office.
  • No cost to you. The bank will pay the all the commissions and closing costs.
  • Homeowners may receive Up To $3000 In Government HAFA Relocation Funds at closing.
  • Some lenders are offering qualified homeowners Up To $35,000 At Closing (call for details)
  • If you can still afford your home we offer Strategic Short Sale Default / "Walk Away Plans".
  • No obligation. Cancel your listing at any time.
  • Weekly updates on the status of your short sale.
  • You may still pursue a loan modification during the short sale process.
  • Industry proven short sale system with a 95% success rate.
  • Experience. I've worked with all the major lenders.
  • You may remain in your home during the short sale process.
  • Discreet sales process. No one will know your home is for sale.  (some restrictions apply)
  • Our team will help you find a rental home after the short sale is completed at no cost.
  • I am sympathetic to your needs and I will hold your hand the entire time.

Short Sale vs. Foreclosure:
 

 

SHORT SALE

FORECLOSURE

Purchasing A New Home

As soon as 2 years with an FHA loan (only 3.5% down payment).

Normally 5 - 7 years.

Credit Score

As low as a 50 point hit if you keep your payments current.

The credit hit can range from a 150 to a 300 point reduction.

Credit History

 

A Short Sale will normally be reported on your credit as, “Paid in full, Settled” or “Paid, Settled for Less Than Owed”.

The Foreclosure will remain as a public record on your credit history for 7-10 years.

Deficiency Judgment
UPDATE, 7/16/2011- CA Senate Bill 458 Passes Banning Deficiency Judgements from ALL 2nd Lein Holders when they approve a short sale.
UPDATE, 1/1/2011 -
CA Senate Bill 931 Passes Banning Deficiency Judgments from ALL 1st  Lien Holders regardless of loan or occupancy type.
 

The bank has the right to pursue a Deficiency Judgment (except in those states where there are no Deficiency Judgments).

Deficiency Amount
NONE:
SB 931 PROTECTION for 1st liens
SB 458 PROTECTION
for 2nd liens

With the typical Foreclosure, the home will incur legal fees, repair and maintenance costs, insurance costs, etc… and in the end will normally sell for a lower price as an REO (bank owned home). This will create a larger deficiency amount.
Just A Sample Of My Recent Short Sale Success Stories:

 

 

City

Sold Price

Amount Owed

Lender


Aliso Viejo

Huntington Beach    


$200,000

$455,000 


$375,000

$610,000 


Wells Fargo

Bank of America 

Laguna Niguel

$735,000

$1,020,000

Chase

Irvine

$1,221,000

$1,450,000

Bank of America

Ladera Ranch

$950,000

$1,300,000

HSBC Mortgage

Mission Viejo

$599,000

$815,500

GMAC Mortgage

Coto De Caza

$1,100,000

$1,500,000

Private Hard Money

San Clemente

$825,000

$1,050,000

Citibank

Tustin Ranch

$699,000

$860,000

OCTFCU

Newport Beach

$1,310,000

$1,670,000

Bank of America

Rancho Santa Marg.

$301,000

$402,500

Mortgage IT Inc.

Laguna Niguel

$241,500

$462,600

Nations Choice Mtg

Irvine

$680,000

$739,000

Citibank

Irvine

$300,000

$402,000

Bank of America

Rancho Santa Marg.

$115,000

$269,950

Clarion Mortgage

Fountain Valley

$245,000

$421,200

Chase

Menifee

$262,000

$555,000

American Mtg

Garden Grove

$199,000

$440,000

Bear Stearns

Corona

$300,000

$639,000

Bank of America

Huntington Beach

$560,000

$710,000

Bank of America

Westminster

$225,000

$344,000

First Franklin Corp
Lake Elsinore
Costa Mesa      

$176,000

$300,000 

$371,990

$489,000 

Wells Fargo

Bank of America 

Aliso Viejo

$432,280

$567,000

Mylor Financial

San Clemente

$166,000

$247,200

Loan Link Fin.

Orange

$525,000

$705,000

Clarion Mortgage

Mission Viejo

$560,000

$812,000

Fremont Inv.

Costa Mesa

$385,000

$529,500

Bank of America

Irvine

$530,000

$651,500

Lehman Brothers

Santa Ana

$380,000

$589,000

Sbmc Mortgage

Mission Viejo

$580,000

$760,000

Bnc Mortgage

Winchester

$240,000

$465,500

Southstar Funding

Irvine

$613,600

$630,000

Wmc Mortgage

 

 

 

 
 
I've Completed Short Sales With These Major Lenders / Loan Servicers And More Using
The Mortgage Forgiveness Debt Relief Act and CA SB 931 and CA SB 458.  
 
 

Things to Remember about Short Sales:

  • FREE, there are no costs to you.
  • Your lender will pay all commissions, closing costs and other fees.
  • Experience counts.  Normally, you only get ONE chance at a short sale.
  • I've helped homeowners receive over 20 Million in negative equity debt relief.
  • You may qualify for a short sale even if you do NOT have a financial hardship.
  • Your consultation is confidential, free and there’s no obligation.
  • You can cancel the short sale process and listing at any time.
  • A short sale is a dignified solution and the best long term alternative to a foreclosure.
  • Eliminate all your back property taxes and back HOA dues.
  • Experience real debt relief unlike most loan modifications.
  • You have nothing to lose. It's only a phone call.

 

Call Mike Pahua (949) 309-2400 for a Confidential No Obligation Consultation
  About Mike
 

Frequently Asked Questions (FAQ) about Short Sales:
 
 

  • Q. What is a Short Sale?
A.    A short sale is the process by which a homeowner can sell a house for less money than he
actually owes on the mortgage(s). If the bank approves the discount on the mortgage, the home
can be sold for a lower price without the seller having to come up with cash to cover the shortfall,
and the mortgage is satisfied and the foreclosure process stops.
 
 

  • Q. Who pays the fees in a Short Sale?
A.    The lender(s) will pay all the real estate commissions and the closing costs for the seller.
The lender will often pay back property taxes and past due association dues if applicable.
 
 

  • Q. How do I qualify for a Short Sale?
A.    The most important factor in qualifying for a short sale is having a legitimate hardship and
being able to prove your inability to repay your loan(s). The short sale process is complex and
often frustrating for the seller. It is important that the seller is flexible with the lender’s
documentation requests and time lines.
 
 

  • Q. What is a legitimate Hardship?
A.    Your financial hardship can take many forms. The most common hardships include one or
more of the following. Job Loss or Reduction of Income, Divorce, Illness, Mortgage Payment
Increases, Debt Increases, etc… Every home owner’s situation is different so you are encouraged
to call for a confidential consultation. Strategic short sale plans are also available. 
 
 

  • Q. How long does a Short Sale take?
A.    My quickest approval on a short sale took 8 business days (Citibank). My longest approval
on a short sale took 18 months (Bank of America). The average length of a short sale is 3-4 months from start to finish.  Keep in mind, each lender has a different process and often
the timeliness of a short sale is dictated by the individual bank negotiator we are assigned to.
 
 

  • Q. Why would a bank agree to a Short Sale?
A.    For a lender, approving a short sale avoids many of the costs associated with the foreclosure
process. Attorney fees, delays from borrower bankruptcy, damage to the property, repair costs
associated with resale, additional property taxes, property insurance, etc. all must be paid by the
bank in a foreclosure until it’s resold. In a short sale, the lender is able to cut its losses by getting
 rid of the property faster and avoiding many of the expenses.
 
*This is not meant to be a complete or exhaustive advertisement about short sale or foreclosures. Nor, are we giving legal or tax advice in any way.
Every situation is different and you are encouraged to obtain legal and tax advice from the appropriate professionals prior to pursuing the services of a
 short sale agent.* Mike Pahua specializes in and seeks to list:  Anaheim Short Sales, Anaheim Hills Short Sales, Brea Short Sales, Buena Park Short Sales,
Costa Mesa Short Sales, Corona Del Mar Short Sales,  Coto De Caza Short Sales, Cypress Short Sales, Dana Point Short Sales, Fountain Valley Short Sales,
Fullerton Short Sales, Garden Grove Short Sales, Huntington Beach Short Sales, Irvine Short Sales, Ladera Ranch Short Sales, Laguna Beach Short Sales,
Laguna Hills Short Sales, Laguna Niguel Short Sales, La Habra Short Sales, La Palma Short Sales, Lake Forest Short Sales, Los Alamitos Short Sales, Mission
Viejo Short Sales, Newport Beach Short Sales, Newport Coast Short Sales, Orange Short Sales, Placentia Short Sales, Rancho Santa Margarita Short Sales,
San Clemente Short Sales, San Juan Capistrano Short Sales, Santa Ana Short Sales, Seal Beach Short Sales, Stanton Short Sales, Tustin Short Sales, Villa Park
Short Sales, Westminster Short Sales, Yorba Linda Short Sales, All Orange County Short Sales, Anaheim Short Sale Realtor, Anaheim Hills Short Sale Realtor,
Brea Short Sale Realtor, Buena Park Short Sale Realtor , Costa Mesa Short Sale Realtor, Corona Del Mar Short Sale Realtor, Coto De Caza Short Sale Realtor,
Cypress Short Sale Realtor, Dana Point Short Sale Realtor, Fountain Valley Short Sale Realtor, Fullerton Short Sale Realtor, Garden Grove Short Sale Realtor,
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realtor 
  
Call Mike Pahua (949) 309-2400 for a Confidential No Obligation Consultation
 
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