Archive for the ‘las vegas short sales’ Category

Mortgage Modifications, Short Sales, Unnecessary for Discharged Mortgages

Saturday, September 3rd, 2011

Financial hardships can strike Las Vegas residents more than once. Worse, they often occur to people who have already filed a Chapter 7 bankruptcy and received a discharge. This means a second bankruptcy is not an option.

For those who have underwater mortgages, that is, they owe more on their houses than those houses are worth. For them, a mortgage modification or a short sale may be the only remaining option. Whether they’re eligible is one thing, but more importantly, we need to know what happened in the Chapter 7 bankruptcy:

Did they sign a reaffirmation agreement with the bank even though they were making regular payments and not in danger of foreclosure?

What is a reaffirmation agreement and why is it important?

Read on.

A reaffirmation agreement is a deal between a bankruptcy petitioner and a secured creditor. The agreement keeps the secured property out of the bankruptcy estate so long as you promise to keep making payments on the debt. It requires three signatures: the debtor’s, the attorney’s, and the lender’s. The attorney must affirm that the debt will not constitute an “undue hardship” to the petitioner, which means the debtor’s household income will still be positive after subtracting the amount of payments. The attorney’s signature also demonstrates that the debtor was not coerced into signing the agreement.

If the homeowners were making payments and were not at risk of foreclosure, they probably exempted it because Nevada’s bankruptcy exemptions allow petitioners to keep up to $125,000 of homestead value out of the bankruptcy estate. After their Chapter 7 bankruptcy, their mortgage would’ve been discharged. This means they do not need to continue making payments on the house. In these circumstances, a modification or a short sale is unnecessary. For those who signed a reaffirmation agreement, however, the situation is different. The homeowners did not discharge their mortgage, so they are now stuck negotiating with a lender that has a far better bargaining position.

The lesson of this story is that Las Vegas homeowners seeking bankruptcy protection need experienced legal counsel to ensure their property is protected.

For more questions about bankruptcy in Las Vegas, please feel free to contact an experienced Haines & Krieger Las Vegas bankruptcy attorney for a free initial consultation. Call us at 702-880-5554 today!

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4 Things to Know about Short Sales, Foreclosures, and Their Affect on Credit Scores

Tuesday, August 30th, 2011

Many people in Las Vegas are behind on their mortgages. Worse, many of them owe more to the banks than their houses are worth. Negative equity and inability to pay bills can be a nightmare.

Often, people hear about two common options: foreclosure and short sale.

Foreclosures, of course, occur when the bank chooses to repossess a debtor’s home.  Short sales are when the homeowner and the bank agree to the homeowner’s decision to sell the home for less than the balance of the mortgage. The bank may choose to forgive the deficiency, but they frequently do not.

Homeowners facing these problems may be future-oriented and wonder what affect foreclosure and short sales do to their credit scores. Here’s our answer, courtesy of the New York Times.

(1)  In a short sale with no deficiency, the former owner’s credit score will be manageable within nine months or so of consistent payments. While this won’t instantly qualify someone for a new mortgage, it will help with other kinds of credit.

(2)  Foreclosure damages credit more significantly than short sales do. The Times article provides two examples: one can return to a 680 three years after foreclosure, provided he or she makes regular payments. Returning to a 780 takes seven years after a foreclosure. Clearly, this is something homeowners want to avoid.

(3)  As always it’s better to file bankruptcy than allow a pile of unpaid bills to mount. Bankruptcy is an act of fiscal responsibility, contrary to popular belief. Some homeowners may be better off short-selling or offering their deeds to the bank in lieu of foreclosure and filing bankruptcy on the deficiency than accepting foreclosure.

(4)  As to borrowing a fresh mortgage, the Fair Housing Administration (FHA) provides guidelines for the wait-period between losing a previous home and obtaining approval for a new mortgage. Those whose houses suffered foreclosure will wait the longest, often seven years. For bankruptcies it’s four years. If the homeowner fell into financial hardship because of a lost job, illness, or divorce, the FHA creates exceptions. These exceptions can reduce the wait-period to two to four years.

We cannot stress enough the importance of seeking an experienced bankruptcy attorney when faced with unpaid mortgage bills. If this describes your situation, waiting for foreclosure will do more harm than any other course of action.

For more questions about bankruptcy in Las Vegas, please feel free to contact an experienced Haines & Krieger Las Vegas bankruptcy attorney for a free initial consultation.

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Las Vegas Homeowners Have Options for Underwater Mortgages

Wednesday, March 16th, 2011

If you are a Las Vegas homeowner who owes more money on your mortgage than your home is worth, there are a several options for saving your home. One of the latest is an $11 billion program through the Federal Housing Administration called “Short Refi.” Under this program a non-FHA borrower may be able to obtain a new FHA-insured mortgage.

To qualify for the Short Refi program, the homeowner must be current on the monthly mortgage payments. The new primary FHA-backed loan cannot exceed 97.75 percent of the value of the property; and the second mortgage cannot exceed 15 percent of the property value. Additionally, the lender must agree to write off at least 10 percent of the loan’s principal balance.

Fannie Mae and Freddie Mac loans do not qualify for the Short Refi program. The New York Times reports that 23 lenders have signed on to the Short Refi program and are offering refinancings. Notable non-participants are Bank of America, Citibank, and JP Morgan Chase.

There are several programs available to save an underwater mortgage, so the homeowner is not stuck with a “one-size-fits-all” refinancing dilemma. One federal refinance program that has seen some recent success is the Home Affordable Refinance Program (HAMP). Refinancing a mortgage under HAMP during bankruptcy is specifically authorized and can save the homeowner significant money when combined with a bankruptcy discharge. Additionally, debtors in Chapter 13 bankruptcy may be able to strip off a second or third mortgage if the loan is entirely unsecured. For instance, if the value of the home is $200,000, and the first mortgage is $200,000 or more, then any additional mortgage or lien on the property would be entirely unsecured and could be stripped off during Chapter 13 bankruptcy.

If your home is underwater and you are struggling with debt, speak with an experience Haines & Krieger bankruptcy attorney and discuss your options. Call us at 702-880-5554 to set up your free consultation. In many cases you can discharge your unsecured debt through bankruptcy and refinance or modify your underwater home loan to new, affordable terms. Get the facts about rescuing your underwater mortgage today.

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Las Vegas Short Sale Tax Consequences

Friday, February 25th, 2011

A short sale is the sale of real estate for less than the balance owed on the property. Short sales are common in today’s real estate market, where home prices have fallen and the home owner is no longer able to pay the mortgage loan. A short sale takes cooperation between the home owner and the lender to sell the property at a loss. Both parties must consent to the sale. A short sale can avoid a foreclosure, which can be mutually beneficial to the parties. The lender avoids the expense of a foreclosure and the home owner avoids the negative impact on personal credit.

Short sales were seldom used by homeowners prior to the mortgage crisis because a short sale results in a deficiency balance obligation to the homeowner. The home owner was sometimes sued for the difference between the amount owed on the home and the short sale price, or, more commonly was taxed by the IRS on the amount “forgiven” by the lender. Either way, a short sale created another heavy burden on the home owner.

In response to the mortgage crisis, the Mortgage Forgiveness Debt Relief Act was signed into law in 2007 which excludes from income a discharge of debt on a principle residence. Debt forgiven by a lender in connection with a foreclosure, refinance, or short sale in calendar years 2007 through 2012 is eligible for this relief. Up to $2 million is excluded ($1 million if married filing separately). This relief only applies to a principal residence, and does not include a second home, credit cards, or a car loan.

A forgiven debt is generally taxed as income to the tax payer, but that is not always the case. The most common exclusions of this tax are: (1) if the tax payer was insolvent immediately before the debt was forgiven; (2) if the debt was discharged in bankruptcy; or (3) if the debt is a qualified principal residence indebtedness until 2012.

If you are struggling with a home mortgage and need to walk away, consult with an experienced Haines and Krieger bankruptcy attorney at 702-880-5554 and learn how the law can work for you. Your attorney can explain your options and together you can make the decisions for a better financial future.

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How to Walk Away From a Las Vegas Mortgage

Thursday, January 20th, 2011

Realizing that you can no longer pay for your Las Vegas home means that you have difficult decisions to make.  While modification and even lien stripping in bankruptcy may be options for some, if you truly cannot afford to keep your home, you must decide on the best way to walk away.

Do Nothing

If you do not pay your mortgage payment, the lien holder will foreclose on your property.  Although not paying your mortgage payment and the resulting foreclosure will significantly harm your credit rating, the home finance industry is presently in such turmoil that it may be months to more than a year before the lien holder forecloses on your property.  During this time you live rent free and can save for the future.  Note that if you do not maintain insurance and do not pay real estate taxes, the foreclosure timeline will likely accelerate.  Also note that under the Mortgage Forgiveness Debt Relief Act, which extends through 2012, income normally attributable by the IRS in connection with a foreclosure is not taxable, although you may be liable for a deficiency balance when the home is sold for less than you owe.  A foreclosure is listed as a public record on your credit report and the late payments are also reported.

Deed in Lieu of Foreclosure

Some financial “experts” have advised distressed homeowners to “just walk away.”  Walking away from a home is easier said than done, since you still own the home and are legally responsible for the property in a variety of ways.  One way to legally “walk away” is to transfer title of the property via a Deed in Lieu of Foreclosure.  Now the lien holder owns the property, which may sound pretty good until the property is sold for less than you owe, triggering a deficiency balance.  You may also end up owing taxes on the difference.

Short Sale

A Short Sale is a sale for less than what is owed by the seller.  A lender will sometimes agree to allow the property to be sold for less than you owe if it is clear that you are unable to continue paying for the property and the home is upside-down.  In many cases the Short Sale deficiency is forgiven by the lien holder, but that will depend on the lender and on state law.  A Short Sale is identified as a settlement on your credit report and will hurt your score, although not as much as foreclosure or bankruptcy.

Bankruptcy

A bankruptcy is a legal discharge of your debt.  It is the cleanest and most powerful option to “walk away” from the home with no contract or tax obligation.  A bankruptcy uses the power of federal law to stop further negative credit reporting and collection attempts.  In the end your credit report identifies the loan as “Discharged in Bankruptcy” with a “Zero Balance.”  The bankruptcy record will stay on your credit report for up to ten years, but by surrendering the property you will avoid a foreclosure on your record.

If you need to walk away from your home and are weighing your options, consult with an experienced Haines and Kreiger bankruptcy attorney by calling 702-880-5554 and learn how the federal bankruptcy laws can help.  Bankruptcy can provide you time to move without foreclosure and without owing money in connection with the home.

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7 Items You Need for a Las Vegas Short Sale

Tuesday, September 28th, 2010

Short sales are all over the news these days as they are a potentially effective exit strategy for homeowners whose mortgages are underwater.

What is a short sale?  In case you’re not familiar, a short sale is where the sale price of a home is less than the underlying mortgage.  And the bank is willing to eat the difference (known as the “deficiency”).

While short sales are a useful tool for homeowners, they can also be complicated as there are a number of moving parts in the transaction.  One thing you can do to help your cause, however, is to be prepared.  Therefore, we’ve provided a list below of…

7 Items You Need for a Las Vegas Short Sale

1.  Hardship letter:  This is a letter that summarizes the financial trouble you’re facing and explains the reasons why you need and are seeking a short sale.

2.  Statement of your finances:  This should list all of your income and your expenses.

3.  Paycheck stubs:  These should be from the previous 2 months (or most recent 2-month period)

4.  Bank statements:  Get your bank statements from the past 2 months.  If you can’t find them, ask your bank.  If you use online banking, you can also usually download them and print them out.

5.  Income tax returns:  You will need your tax returns form the previous 2 years.

6.  Statement of Profit & Loss:  You will need this only if you are self-employed.

3 Additional Items You May Need for a Las Vegas Short Sale:

1.  Your mortgage statements along with any documents or notices received you’re your mortgage lender.

2.  A statement of any Homeowners Association (HOA) fees owed (if you are part of a Homeowners Association).  This should show whether you’re current on payments and whether any payments are due.

3.  To sign a form that authorizes the listing agent to proceed with any discussions or negotiations with the mortgage lender on your behalf.

Timing can be extremely important to the success of a short sale.  As a result, it’s important to emphasize that any preparation you can do to help the process go smoothly will go a great way towards helping your cause.

If you need help with a short sale or with foreclosure issues, please contact a Haines & Krieger attorney for a free initial consultation.  We have extensive experience with short sales in Las Vegas and can help you move forward with your financial life.

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Las Vegas to change to “Short Sale Capital” from “Foreclosure Capital”?

Tuesday, February 9th, 2010

It looks like banks are finally getting their act together and realizing that foreclosing on a homeowners is ultimately more costly than allowing them to complete a short sale.  At least according to an article in the Las Vegas Sun (“Short sales soar while foreclosure sales slacken“).

A “short sale,” for those unfamiliar with the term, is where a bank allows a home to be sold for less than the amount left on the mortgage.

I’d like to be able to say that this trend is occurring because banks did the math and had the foresight to realize that the overall cost of foreclosure–including the devastating impact it has on communities in the midst of a foreclosure crisis of this scale–would ultimately be much greater than any losses due to short sales.

But it seems like this is really only occurring because the government is finally offering incentives to banks and because banks have tired of flooding the market with foreclosed properties which is now just depressing the real estate market further.

In any event, it is occurring now and it’s important to be aware of.

If you’re concerned about foreclosure in Las Vegas, it helps to have good Las Vegas bankruptcy attorneys to provide Las Vegas foreclosure help and, if necessary, Las Vegas bankruptcy help.

There are a range of options, from loan modification to foreclosure mediation to use of the bankruptcy laws for your benefit.

Please contact us for a free consultation to learn more about your options and have the benefit of Haines & Kriegers’ extensive foreclosure experience on your side.

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Should I keep my Las Vegas house or not?

Monday, November 23rd, 2009

In the early 1980s the British punk band The Clash asked a question many homeowners are struggling with today:

Should I stay or should I go now?

If I go there will be trouble

And if I stay it will be double

So you gotta let me know

Should I stay or should I go?

Walking away from a home that is worth less than the mortgage debt is not simply a financial decision, it is a moral dilemma. University of Arizona associate professor of law Brent T. White argues in a paper entitled “Underwater and Not Walking Away: Shame, Fear and the Social Management of the Housing Crisis” that Americans who own homes that have depreciated far below the amount owed would be better off walking away and renting. In this paper recently featured by the Wall Street Journal Online, Mr. White says homeowners are kept in these “upside-down” homes by feelings of fear, shame, and guilt that are encouraged by politicians and bankers.

No one wants to walk away from a family home, but one should consider the financial consequences of staying. White gives the example of homeowners “Sam and Chris” who purchased a home for $585K 2006. Their mortgage payment is $4,300/mo. White explains:

Unfortunately for Sam and Chris, the housing market began to collapse in 2007. Though they still owe about $560,000 on their home, it is now only worth $187,000. A similar house around the corner from Sam and Chris recently listed for $179,000, which, with a modest 5% down, would translate to a total monthly payment of less than $1200 per month – as compared to the $4300 that they currently pay. They could rent a similar house in the neighborhood for about $1000.

Assuming they intend to stay in their home ten years, Sam and Chris would save approximately $340,000 by walking away, including a monthly savings of at least $1700 on rent verses mortgage payments, even after factoring in the mortgage interest tax reduction. The financial gain for Sam and Chris from walking away would be even more substantial if they took their monthly savings and put it into an investment account. If they
stay in their home on the other hand, it will take Sam and Chris over 60 years just to recover their equity.

Walking away from a financial obligation can be a gut-wrenching decision. If you are struggling with an upside-down home and indecision’s bugging you, speak with an experienced bankruptcy attorney like Haines and Krieger of Las Vegas. Only a licensed attorney can explain the legalconsequences of walking away from a home.

For a free consultation or if you need any assistance from Las Vegas Bankruptcy Attorneys, or have questions about Las Vegas Chapter 7 Bankruptcy, or Las Vegas Chapter 13 Bankruptcy, or Las Vegas Debt Settlement, please call the offices of Haines and Krieger at 702-880-5554 today.

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Las Vegas short sale vs loan modification

Thursday, June 18th, 2009

Help Stop Foreclosure Las Vegas

Loan modifications and short sales are two ways to potentially avoid foreclosure on your home.

What’s the difference?  And what are the pluses and minuses of each option?

Loan Modification – Loan modification means negotiating with your bank or mortgage lender in order to change the terms of your loan so that you can continue to make payments and keep your home.  Maybe you get a lower interest rate.  Maybe stretching out the payments so you pay less each month.  Maybe the bank wipes away some penalties for late payments.  Maybe they even reduce the principle.

Short Sale – A short sale occurs when you sell your home for an amount that’s less than the outstanding balance on the mortgage, but the bank forgives the whole amount.  This is happening a lot these days, especially in Las Vegas, where people can’t make their mortgage payments in areas where housing values have declined significantly.  The bank essentially says that it’ll take what it can get if you can sell the house for a half-decent amount and it’ll call things even.

So which one is better?  Obviously if you want to keep your house without filing for bankruptcy, then loan modification is the way to go if it’s an option.  (If it’s not, then Chapter 13 bankruptcy is of course another option.)

And if you don’t feel you can keep up with payments and just want to wash your hands of everything, then the short sale is the better option.

But let’s look a little closer at some of the other upsides and downsides of the two options.

Loan Modification

Upside

  • Halts the foreclosure process
  • You don’t need to worry about relocating or finding a new place
  • A little breathing room with reduced monthly mortgage payments
  • Credit score not lowered as much as it would be with a short sale or bankruptcy filing
Downside
  • Maybe reduced monthly mortgage payments isn’t enough to keep you above water
  • It’s only a short term solution.  Reduced payments often last for a limited time period before you have to go back to the original payment schedule
  • If you miss any payments under the modified loan terms, the lender will likely initiate foreclosure hearings again
Short Sale

Upside
  • Once you complete the transaction, that’s it, you’re done.  No more monthly payments.
  • Bank will often be willing to cut its losses and forgive the outstanding balance on the mortgage if you can sell it for a reasonable price
Downside
  • You need to move and find a new place to live.  In addition to the stress and costs of moving, a history of not being able to make your payments on your mortgage may make landlords more cautious about renting to you.
  • If the bank reports its loss to the IRS, then it can be interpreted as income for you which you might have to pay taxes on.  (i.e., If someone loans you $100, you don’t have to pay taxes on it.  If someone gives you $100, that’s income and you do have to pay taxes.  If someone loans you $100 and then tells you you only have to pay back $70, then they in essence gave you $30 of income, which is taxable.)
  • No chance of getting a mortgage again for at least the next several years.
Hopefully this helps you understand some of the tradeoffs and consequences of each option.  And of course, if you have more questions or want to understand all of your options, it’s always good to consult with a bankruptcy attorney in Las Vegas.

Feel free to get in touch with us for a free consultation whether you need help or advice regarding loan modification, short sales, foreclosure, Chapter 7 bankruptcy or Chapter 13 bankruptcy.  Haines & Krieger is a great source of bankruptcy information in Las Vegas, whatever your question or concern.

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