Southern Nevada realty professionals expect that U.S. lawmakers’ extension of the Mortgage Forgiveness Debt Relief Act through 2013 will lead toward more short sales as homeowners who are delinquent on their underwater mortgages may finally decide their course of action before this tax break expires on Dec. 31. Those who move forward with a short sale may not be relegated to renting and have the option of buying another home due to new privately funded loan programs such as Another Chance Nevada.
“The extension should have a very positive impact on our market immediately,” Bob Hamrick, a longtime Realtor and owner of Coldwell Banker Premier Realty, said. “There were hundreds to thousands of transactions that closely missed the Dec. 31st (2012) deadline. Many of those sellers had selected to not proceed with their short sale void of the extension. On a short-term … basis, the extension will have a significant impact on helping underwater homeowners in their decision to move forward with their short sale or other remedies.”
The act, which was first signed into law in 2007 and extended as a part of the Jan. 1 bipartisan agreement to help avert the “Fiscal Cliff,” continues a tax break that exempts most homeowners who complete a short sale on their principal residence from having to pay federal taxes on the cancelled balance of their mortgage of up to $2 million (or $1 million if filing separately). Borrowers who receive partial loan forgiveness from lenders or those who experience a foreclosure may also benefit from this exemption. Without it, debt that is forgiven or cancelled by a lender is normally considered income by the Internal Revenue Service and may be taxable.
According to the Greater Las Vegas Association of Realtors, 45.8 percent of the 2,961 homes sold in December 2012 were short sales, with foreclosures dipping to 9.5 percent of all sales. Hamrick predicts that short sales will continue to dominate the market in 2013 as underwater homeowners decide how to proceed.
“2012 goes in my book as the year of apathy for most underwater homeowners due to many logical and justifiable factors. Primarily, banks holding underwater assets were either self-restricted or legislatively restricted in resolving their situation. Hence, less homeowners received foreclosure notices and were able to postpone their resolution,” Hamrick said. “I believe that 2013 will be the year of urgency, where underwater homeowners will have a defined period to resolve their matters or face worse peril.”
Last year, Hamrick teamed up with Rick Piette of Premier Mortgage Lending’s Another Chance Nevada home loan program, an attorney and a Certified Public Accountant to present educational seminars that addressed the short sale and foreclosure process, its legal and tax ramifications, and the option of purchasing a home shortly afterward through Another Chance Nevada.
“Hundreds of residents attended last year’s seminars, most were either learning about their options as someone underwater in their mortgages or were figuring out how to move forward after a short sale or foreclosure,” Piette said. “Many were trying to determine what would be best for their situation, both in the short-term and in the long-term. They were surprised to learn that they have many options, and that they can indeed purchase a home without a waiting period through my company’s Another Chance Nevada program.”
According to Piette, the program connects individuals who have experienced a short sale or foreclosure with private and institutional portfolio lenders who offer 15- or 30-year, fixed-rate loans at interest rates that are typically higher than traditional mortgage rates.
Full-documentation guidelines are followed and at least a 20 percent down payment is required. The down payment can come from personal funds or can be obtained as a gift from family members. Borrowers may close within 30 days from the time of loan approval, and may refinance the loan at any time without penalty.
An Another Chance loan may be used on the purchase of a re-sale or a new home. The lender is currently working with Beazer Homes, D.R. Horton, Dunhill Homes, Harmony Homes, KB Home, Pardee Homes, Pulte Homes and Del Webb, Richmond American Homes, Ryland Homes, and William Lyon Homes.
“In 2012, many Southern Nevadans decided to purchase another home through Another Chance Nevada and to start re-building their equity by taking advantage of today’s low housing prices. We expect this to continue in 2013 as more underwater homeowners move forward in the short-sale process with the extension of the Mortgage Forgiveness Debt Relief Act,” Piette said.
As a full-service lender, Premier Mortgage Lending provides complimentary mortgage pre-qualification to help people determine if they may qualify for a traditional mortgage or Another Chance Nevada, and to weigh if buying a home is the right decision for them.
For additional information or to schedule an appointment for mortgage pre-qualification, call Premier Mortgage at 485-6600 or visit www.AnotherChanceNevada.com.
Premier Mortgage Lending (NMLS 393282) is located at 8689 W. Sahara Ave., Suite 100, Las Vegas, 89117 and is a member of the Las Vegas Chamber of Commerce, Better Business Bureau and Southern Nevada Home Builders Association, as well as an affiliate member of the Greater Las Vegas Association of Realtors.