When the majority of homeowners start falling behind on their mortgage payments they become ostriches, in other words, they stick their heads in the sand and go into a state of denial. Soon it’s too late to do anything about it. There are many things that we can do to stall foreclosure and get people out with their credit relatively intact. If they owe more than their home might be able to sell for in the current real estate market then this is called a short sale.
We have done a number of these short sales here at the Bernardi Real Estate Group and this is the way that some homes, even in Boulder County, are being sold in the current real estate market. The most important thing in a short sale situation is that we receive an offer from a buyer because the bank will not even begin to negotiate on a short sale until we get an offer. Once the offer is received, we go to work and negotiate with the bank to forgive the current debt up to the amount of the sale. In fact, in most cases, with every short pay we have done this year we have seen that the bank has forgiven all of the debt of the difference between the sales price and the loan amount. They have forgiven what would normally be called short fall or a deficiency and in many cases they will forgive what is called the deficiency judgment. In fact, for every home in a short sale situation that we have sold, the bank has forgiven the deficiently judgment.
If your loan was originated before January 2008 then there is no tax consequence on the amount of the loan that is forgiven. Prior to the bill being enacted last spring by Congress, you were taxed on the difference of the amount forgiven by the loan company. My expert lenders have told me that if a homeowner does a deficiency judgment that their credit is then virtually repaired and they would be able to buy another home within 2 years. If they let the property go into foreclosure, it would be 7 years before they would be able to buy another home. My belief is that by helping families do short sales, I am helping our community and the neighborhoods in all these cities in Colorado that have been affected by foreclosures such as Erie, Lafayette, Longmont and even a few cases in Boulder and Niwot. I feel that in the cases when I’m able to help these homeowners that I’m also helping the communities to not further deteriorate into crisis.
Unfortunately, if the property goes into foreclosure it could sell for no more than 50 cents on the dollar. The pipes could break or the grass goes brown and these foreclosed homes become an eyesore in our community. I feel like I am doing the homeowner a big favor by helping them to salvage their credit as well as assisting them to move on in a dignified manner and by doing that we are also doing the right thing for our community. I believe that I am also helping our country by facilitating the absorption of the real estate inventory in Boulder Colorado to help expedite the end of our real estate recession. In addition, I’m helping our banks because they will receive more money than they would if the property went into foreclosure and this will in turn aid our country. Lastly, I’m helping the buyer because they are getting a great deal on a property that has not been vacant for 6 to 9 months.
If you are facing a foreclosure situation then please call us here at The Bernardi Real Estate Group because I can help.