Cyrus updates his clients on the upward trend in home mortgage interest rates, the recent existing home sales number and the extension of the first time homebuyer tax credit to include move up buyers. Tune in and see why clients find these videos so informative.
Duration : 0:4:0
For real information click HERE: http://best-refinance-home-mortgage-loan-rates.com/
Getting the best refinance home mortgage loan rate, then, can be important to almost any homeowner. READ here to Save your money: http://best-refinance-home-mortgage-loan-rates.com/
Duration : 0:1:38
What is an Adjustable Rate Mortgage or ARM? What is the difference between a fully amortized loan and an interest only ARM? Watch this Expert Real Estate Tips video about adjustable rate mortgage loans (ARMs) and how they adjust after a fixed period of time.
Duration : 0:1:48
This is a recent homebuyers seminar I put together in Daly City, California. If you would like information about further seminars, please let me know at jvetter@mercurylending.com. I can help you with you California and Oregon refinance and purchase needs.
Duration : 0:9:50
Tax on 1099C, Cancellation of Debt Income; Short Sale, Loan Modification & Foreclosure. Exception; Mortgage Forgiveness Debt Relief Act, Bankruptcy & Insolvency. Go To http://RealEstateMarketingThisWeek.com
Part 6 (Excerpts)
Arizona is not a recourse state, so chances are you will not owe 1099 C Income
In Arizona, typically its not a recourse state, so if they are telling you that theyre going to garnish your wages because you didnt pay back your entire mortgage, there is a local bank ,that was threatening a very good colleague of ours about a small second mortgage that person had taken out. Threatening to send it to collections and garnish her wages. It simply isn’t going to happen.
But nevertheless, there is still the tax implications that apply, if you need to navigate through this maze. There is a lot to it, you need to protect yourself. You talked about bankruptcy is one of those exclusions, right? One of the problems with bankruptcy is people dont understand the bankruptcy laws. They are so tight now and your feet are really held to the fire from the federal government right now. It’s not like you just didn’t make your mortgage payment, so you go file bankruptcy, it’s just not realistic. Assuming bankruptcy is the last resort option for everybody. And we certainly want to avoid that, it would not be sound financial advice from any credible source that I can think of.
Let’s walk through a case scenario, somebody who is listening to this broadcast, their head is spinning right now, they’re thinking, oh my gosh. I should have known about the tax implications, a short sale versus loan modification. Let’s start at the top and work through a quick scenario. And then we’ll point out the specifics of what they should be considering right now.
For example, we talk about this all the time and to your credit Michael Barnes and to Velocity Financials credit, you were early in bringing out the loan modification for people who were in a distress situation regarding a mortgage, maintaining or keeping up with the mortgage payment. So you started going down the path where the refinance started to become a much more difficult option, with new constraints and all the other factors that led to part of this economic crisis, a loan modification has become a buzz topic today. Driving to the station today, driving down Camelback Road, I see a sign on the corner. You know, one of those stick in the ground, homemade jobs, that says don’t refi a Loan, modify, with some success rate and the phone number.
Hang on there I want you to say the success rate. The sign literally said, 99% success rate, and it goes back to the point that you made when they say that they can reduce your mortgage principal by tens of thousands, hundreds of thousands of dollars, thats the absolute last resort for any lending institution. Thats not what this is about, so let’s start with that, then we will work on the tax ramifications of how that might work in the overall financial strategy.
I am familiar with the loan modification industry here in Arizona. There is no regulation, unfortunately. We at Velocity Financial work with a national network of attorneys, so if you’re the guy in El Centro California, or youre in Phoenix, or youre in Alaska it doesn’t matter where you’re at. We have someone who is an expert in that field in that state because the laws are different. But without the regulations some person with the ugly yellow sign on the side of the road says he has a 99% success rate, I don’t believe him it’s probably not using an attorney, who knows, dont buy into that garbage. Were going to tell you the truth, if we cant do a loan modification, we will tell you that we cant do it. And if a loan modification is not the best thing for you, you can find the some of these other options.
Duration : 0:5:19
Tax on 1099C, Cancellation of Debt Income; Short Sale, Loan Modification & Foreclosure. Exception; Mortgage Forgiveness Debt Relief Act, Bankruptcy & Insolvency. Go To http://RealEstateMarketingThisWeek.com
Part 5 (Excerpt)
Mortgage Forgiveness Debt Relief Act of 2007, one exception to paying cancellation of debt income
Welcome back to the Velocity of Money I am Michael J. Barnes Arizona’s and I’m with Velocity Financial and were here every week talking about all matters financial, regarding real estate as well as finances. Brett Fallon is back on the air with us again along with Mike Patenella who is a certified public accountant for the last 20 years and amazing brain, were glad he’s back on.
Mike we were talking before the break about loan modifications, my point before going off the air was that people think they’re going to get this huge amount of money waived on a loan that they have, realistically what most loan modifications are going to look like is extended term, significantly lower interest rate, generally a fixed interest rate for the entire time, and in some cases they will do some principal reduction, and there is some exclusions for people having to pay tax on that, is that correct?
Yes, there is, before I get into that keep in mind that with taxes normally not one rule applies to everybody, were going to talk general but everyone’s going to have their own specific situation, that they’re going to have to really check with somebody and make sure they’re doing the right thing. In 2007 in response to the economic situation, they passed a mortgage forgiveness debt relief act which essentially allows people to not pay tax on $2 million dollars debt forgiven on their principal residence. Thats in regard to be principal reduction, loan modification.
Right, so in your example if $50,000 of your loan is being reduced, if your situation fits, under this new law, we might be able get you to avoid the tax on that.
Once again a very good reason for you to go to a professional CPA like yourself for that help, not something the average person is going to be able to figure out on their own. You have to keep up on the tax law and that’s almost a full-time job.
Hey how many pages is that tax code now? On last count I heard you say it was something like 9000 pages.
I don’t know the exact number of pages I know it’s in the several thousand and as Mike knows quite well, and I am aware of also is the tax code has been morphing and changing more than I have ever seen in my entire career here recently. Going back to the tax act of 2003 to the present there have been literally hundreds of changes. So for the average person whos listening to this broadcast who is considering a loan modification, trying to take care of a portfolio, and take care of their taxes at the same time, WOW! Good luck to you
So exclusions to the income, can we talk about a few different ones?
Sure bankruptcy is one exclusion, if you’re filing bankruptcy; the other one is if the taxpayer is insolvent which essentially means that their liabilities exceed their assets. When you factor in assets you factor in retirement accounts and all that, its not that easy to fall under that one.
Oh so the value of my 401(k) goes into that on the other side of the balance sheet. So for the most part if you dont fall into one of these two youre going to try to rely on this new tax law to exclude some of the debt forgiven.
How long ago was that past? I am sorry I don’t remember, was that August of 2007? It’s called the mortgage forgiveness debt relief act of 2007 and it only applies to qualified principal residences. Is that ongoing? Is there a cap on the time?
Well originally it was set to expire at the end of 09. Then in 2008, since the economy kept getting worse they extended that another three years or so through 2012
Well we hope were all well through of this mess sooner and we won’t have to need this any longer after 2009. Actually I want it gone now.
Duration : 0:6:20
Amidst the Real Estate & Mortgage Meltdown; Foreclosure Fraud & Scams; Real Estates Future is Great. First Time Home Buyers, FHA Loans & Seller Paid Closing Costs. Go To http://RealEstateMarketingThisWeek.com
Part 4 (Excerpt)
Mortgage Backed Securities, Collateralized Debt Obligations and Tranches Oh My!
Now, I put the colorful title on How to Screw the Bank that Screwed You for no other reason than to get people to click on it to get the information, because frankly, a lot of people were given really bad loans, were given really bad advice, and sometimes you have to fight back.
Here is one of the things and again Ill try to make this as uncomplicated as possible. Let’s say you bought the house and you got the loan through a mortgage broker. Well that mortgage broker didnt really give you the loan. They bought that loan from a wholesaler of mortgages. That wholesaler of mortgages, in turn bought that loan from one of those big huge Wall Street banks, most of which are out of business right now.
Important thing to point out if I may, Velocity Financial is a mortgage broker, we do get our money from several wholesale banks, I just wanted to point that out because we’re glad were a broker.
Just to continue the analogy. So the broker buys it from a wholesaler, who buys it from the Wall Street bank, and like I said, most of them are out of business now. And what the Wall Street bank did with thousands of these loans worth billions of dollars, they put them all together into what is known as mortgage backed securities. That is the stuff you hear like Fannie Mae is selling and there is an interest rate put on them, and what happened to these mortgage backed securities is they in-turn were bought up by other Wall Street banks, combined with other mortgage backed securities and they were called collateralized debt obligations.
Well then these brainiacs on Wall Street decided to chop these collateralized debt obligations up into what is referred to as tranches. So let’s say you had your best quality AAA borrowers in the top tranch . And obviously your ZZZ borrowers were in the bottom tranch. Each one of them was given a specific interest rate, each one of them was rated by a bond rating firm, and each one of them was given insurance.
Well, what happens is as these got split up and sold over time the notes on the mortgages go with the debt itself. So CDO over in Bangladesh owns your mortgage now, but here is the problem, they dont have the paperwork.
So the reason I went through this whole story is in case your bank comes to you and says were going to foreclose what you want to do is go and get yourself an attorney and you want this attorney to go to this bank and say we want you to prove to us that you have standing, that they have the legal right to come after you and foreclose on you. And here is the thing, if they dont have the paperwork, if they dont have the note on the property, they cant prove that they have standing. So whether its the wholesaler, who is foreclosing on you, whether its the servicer, whoever it is, chances are very good that they dont have this note.
So again, he got a little complicated. You want to go to the website http://mortgageanswerman.com and there are several articles there, and a lovely little chart that I drew up, except that it will be much nicer than this piece of paper, and I will have all the information there. I had a friend just recently who was in foreclosure and she made the phone call, and she said, you cannot foreclose on me without the original note. Now eventually it got foreclosed on, but it delayed it several months until they were able to find that note. Chances are they may never be able to find that note.
And in many states, including Florida and Ohio they are very successful at using this tactic to stop or completely do-away-with the foreclosure sale. We dont necessarily want to encourage people to go down this path, right? Were looking for a stall essentially?
Well, hopefully no one will ever have to get to that point. But if you believe that your servicer, your mortgage company is not being nice to you. Especially if you call them up and want to do a loan modification, and they are dragging their feet, filing foreclosure and coming after you, you have to protect yourself. And this is one of the ways you can protect yourself by hiring an attorney and suing them for lack of standing
That is one of the things that I want to talk about that Velocity Financial is involved with a national network of attorneys who do this sort of work. Velocity Financial does not charge an upfront fee for these types of loan modifications, we do hire an attorney and they work with the national network of attorneys to work on your behalf. They do charge a retainer, of course, if they are going to fight for you they need to be paid, however, there are no upfront fees…
Duration : 0:6:36
Home Loan Modifications Negotiated by Licensed Attorneys. Real Estate & Mortgage Laws and Guidelines are Complex. Beware of the Banks Loss Mitigation Department. Go To http://RealEstateMarketingThisWeek.com
Part 7 (Excerpt)
Attorney negotiated loan modification process Going thru the Legal Door
We have Dan Havey with us talking about loan modifications. This segment we want to talk about the specifics of the actual mechanics of, how does it actually work for the homeowner? Let me just start it off and if you would then explain the back end of how it works. Our job is to determine where you’re at now, be very specific about where you’re at with your mortgage now, what the rate is, what it’s done, those specifics. How much you make? We have to help the lender with one thing which is to establish a hardship which is crucial to this. You can’t be making half $1 million a year paying $5000 a month in a mortgage, they are not just going to lower your interest rate because you want it. There actually has to be some sort of change, financial change, hardship.
We determined that and then there is a significant amount of paperwork involved, Velocity Financial takes care of that for you. We fill out the paperwork along with your help, review all of the documentation, we then recommend be right loan modification, whether it be an interest rate reduction, or extending the term of your loan, waiving some of the balance that you owe which is very very rare. To make sure that once we’re done with this whole process you can sustain and live in that house and be happy forever.
So the process itself really is not that much different than what people went through when they got their loan in the first place. That is correct and it’s kind of funny, this has to be exactly the reverse. There is paperwork that we need to collect on your mortgages, we check the value of the property to see where you’re at and in most cases youre underwater with the value. We dont do an appraisal though, there is no credit analysis, we do review your finances, and these sorts of things but essentially it’s just like doing a loan. What we’re trying to determine is exactly what is sustainable for you.
So what we do at the modification hotline at Velocity Financial is to put together the entire package, just like we do for a loan package because we basically send this to a underwriter, theyre not known as an underwriter they’re known as a loan modification coordinator but at modification hotline we are the first set of eyes. We work with you directly, getting all the paperwork in, getting it put together because we know exactly what has to be in that file, how it has to be stacked, how it has to be presented, before it goes to the loan modification coordinator who works for the attorney.
Then once it is at the attorneys office with their modification coordinator, they take a look at it, they make sure that everything is in there, they make sure that it is a doable modification. This all happens before it is ever presented to an attorney.
There are a whole lot of steps and there is a lot of paperwork. The process like you said is very similar to a loan with the exception that there are no costs of the title company and all that other stuff. Those dont exist, we dont charge an upfront fee, and we do collect a retainer for the attorney. At some point during our process we make our recommendations and we turn it in. Then the attorney does their due diligence and thats where I really want you to explain what happens, what are these attorneys looking for?
Well this is where it completely goes off track, versus what a homeowner would do if they were doing their own modification, because they would do everything we just talked about, they would fill out the paperwork, get together tax returns, pay stubs, whatever the lender wanted and they would present all of it to the lender. Now they probably wouldn’t know exactly how to stack some of the paperwork, and how to calculate some of the things that we know how to calculate, but they would put all that they work together.
Where the difference comes in is once it gets to the attorney because the attorney ultimately wants to get you a loan modification but they can’t just call up the bank and say hey I want loan modification, because he is going to get the same result you did. So what he has to do is he has to go through the file, and he has to look for things like, I am going to use a bunch of acronyms here, he’s looking for things like TILA, RESPA, HOEPA, HUD violations, all these different guidelines that the lender was required to meet while giving you the loan.
Duration : 0:6:47
Tax on 1099C, Cancellation of Debt Income; Short Sale, Loan Modification & Foreclosure. Exception; Mortgage Forgiveness Debt Relief Act, Bankruptcy & Insolvency. Go To http://RealEstateMarketingThisWeek.com
Part 4 (Excerpt)
1099 C is for Cancellation of Debt Income Only, not for Interest Rate and Payment Reduction
So for people who find themselves in a very difficult situation considering these options whether it’s a loan modification or a short sale, whatever they need to do to relieve themselves of this particular burden of a mortgage, that for whatever reason they’re no longer able to maintain, they are not always considering the tax ramifications associated with taking a specific course of action, like this example the short sale option.
Right there is actually two pieces of tax component here, you have the forgiveness of debt income that we talked about, they still have the fact that you sold your house and you have to see if there was a gain on that. Over and above the cost basis of the home.
We talked about the 1099Cs a few moments ago, did you say that the lender sends a copy of the 1099C to the IRS? Absolutely.
Now I’m the guy for a few minutes ago who bailed on $400,000 and sold it for $300,000 am I going to get a copy of the 1099C if I haven’t given my lender my new address. Well that could be a problem, they will send it to the last address they have on record for you. And as a homeowner it’s my problem.
The IRS will get a copy, so they will look for it on your return, if you forget to put it on then you’re going to get a friendly notice from the IRS.
If somebody is going to do a short sale, its a fairly civil transaction and when I say civil I mean going for a short sale is horrible for them and their family, but it beats the alternative which is foreclosure, and I think the real problem is when there’s a foreclosure and the guy just walks away and moves off to El Centro California, he’s the one who’s really getting hurt.
So in the event that somebody takes a course of action, and I know that Velocity financial and Michael Barnes, youre not necessarily advocates for that short sale approach. It’s not normally the best course of action, we’ve been talking about loan modifications and it would help me when I talk to clients, or people who call from radio broadcasts who asked questions about loan modification process as part of a financial strategy, help me with some of the tax ramifications. Let’s say that I have a loan and I know the best thing for me is a loan modification, am I going to be faced with a 1099? A tax bill at the end of a loan modification?
Yes, the first of the two tax implications will apply which will be the debt forgiveness part.
I didn’t mean to interrupt you Mike, well I said there are several different types of loan modifications, I believe are you asking about when the loan modification is where they actually do forgive some of the debt?
Thats a point, I know there’s been a lot of discussion on the use of the TARP funds especially from the federal government regarding these banks that qualify for some of these funds, they have to do principle reductions for their mortgages. So let’s say there isn’t a principal reduction involved, from that aspect, its not a taxable event that could take place, since I’m not reducing my principal, I’m simply getting a reduction in my term or my rate.
That’s right, the only time that taxes would come into play is when the principal gets reduced because thats forgiveness of debt.
So let’s take that one step further, whatever mortgage interest I’m able to deduct on my taxes may be impacted if it’s a lower percentage, right because youll be paying less interest, but there’ll be no surprise 1099 coming your way if its just an interest modification.
One of the things that I like to make thing clear is that were trying to do the best for you the homeowner so you can stay in your home. The situation I’m talking about, the $400,000, the lender is more likely than not is not going to forgive $100,000, however the same lender is more than willing to reduce your interest rate so that your payment would be the same if they have done the principal reduction, because it’s not a permanent loss for the bank. If there is someone out there who’s telling you that they can have your mortgage reduced by tens of thousands or hundreds of thousands of dollars, it’s not going to happen and I doubt it’s going to happen anytime soon.
Duration : 0:5:58
(Best Syndication) This video will explore the option of refinancing a loan as opposed to taking out a second mortgage. When you refinance a mortgage you are taking out a secured loan that will replace your existing mortgage. As the numbers of foreclosures increase around the country, it is important to consider all of your options.
But why refinance as opposed to taking out that second loan? The first consideration is the interest rate. If a homeowner has been making their payments on an adjustable rate mortgage that has reset to a higher rate, they may be better off applying for a refinance mortgage. Depending on the credit history, a fixed rate mortgage may be available.
Duration : 0:3:27