Weeks ago, the state of California took a step in the right direction by passing a new measure for homeowners agreeing to short sales.  Under the new measure, homeowners would be granted tax relief if they chose to pursue short sales instead of allowing their properties to be foreclosed.  Throughout the state, thousands of homeowners are contending with foreclosure, making this new piece of legislation a great win.

The new bill, which will be signed by Governor Arnold Schwarzenegger, will “waive state taxes on mortgage debt that has been forgiven in a foreclosure or short sale,” reports the Los Angeles Times.  The Los Angeles Times says that the bill is expected to impact approximately 34,000 taxpayers in California.  Additionally, the new measure will allow $60 million in tax credits for companies in the green-energy industry.

While the Franchise Tax Board claims that new short sale tax break would generate $34 million less in revenue for the state of California, it is an important incentive that will greatly help homeowners who have been struggling with foreclosure and sky rocketing mortgages

According to state Senator Ron Calderon, “The mortgage-debt tax relief provision in this bill will provide financial shelter for tens of thousands of Californians who have lost their hopes and dreams in the housing market crash, and it’s about time we gave these folks a helping hand.”

At American Economic Solutions, we are absolutely thrilled about the passage of this new bill which will help those who homeowners who have been dealing with financial hardships for some time now.  With the economic times being so challenging, it is important that the government looks out for taxpayers who are losing their homes due to staggering unemployment rates and the greedy practices of mortgage lenders.  We hope that this tax incentive helps the many homeowners that need assistance so they can repair what damage has been done.

If want to learn more about this tax break, our short sale specialists are always more than willing to lend our insight.  Simply give us a call at 1-888-500-2632!

Read full story from the L.A. Times here: http://articles.latimes.com/2010/apr/09/local/la-me-tax-break9-2010apr09

No one expects to face foreclosure.  The truth is most homeowners in the United States only have to deal with foreclosure after losing their jobs, going through a divorce, suffering from an incapacitating illness or other such life events.  Unexpected events happen to everyone, even responsible homeowners.  However, once people fall behind on their mortgage payments, they will have to deal with the reality of losing their homes if they do not act quickly.

When homeowners receive notices of foreclosure from their banks or lenders after defaulting on their mortgages, they will have two main options:  allow the foreclosure to happen or pursue a short sale.  Before homeowners decide which option is most appropriate for their situation, they need to know the difference between short sales and foreclosure.

What is foreclosure?
Foreclosure occurs when a bank or mortgage lender decides to regain possession of a property after a homeowner has defaulted on his or her mortgage.  Once lenders move forward with foreclosure, homeowners must vacate their properties and surrender their homes.  The damage does not stop there as foreclosures will appear on homeowners’ credit reports and will lower their credit scores.

What is a short sale?
A short sale occurs when both homeowners and lenders agree to sell homes for less than what is owed on the homes.  The lenders accept the loss because it helps them avoid costs associated with foreclosure and homeowners avoid incurring damage to their credit reports.

Which is better?
At American Economic Solutions, we firmly believe that of all the options available, foreclosure is the worst for several reasons:

• You lose your home.
• Your lender may choose to file a judgment against you to collect your past obligations as well as costs related to the foreclosure.
• You will incur significant damage to your credit report for years to come.

With the cons far outweighing the pros, we advise you to steer free and clear of foreclosure and pursue short sales instead.  While you may think that short sales are extremely complicated, time consuming and strenuous, the truth is that when you work with our specialists, the process is very smooth and expedient.  Our short sale specialists will handle all of the applications, paperwork and work with your lender and make sure that things move along quickly.

Contact American Economic Solutions today to learn more about our effective short sale services!

If you are a California homeowner who entered into a short sale or completed the loan modification process in 2009, chances are that you were very relieved to hear that Governor Arnold Schwarzenegger signed SB401.   This new measure was created to offer homeowners tax relief on mortgage debt that was forgiven through:

• Foreclosures
• Short sales
• Loan modifications

Before SB401 came into existence, homeowners throughout the state were exempt from paying taxes on forgiven mortgage debt.  However, they were required to pay state taxes on the supposed income they acquired through short sales, loan modifications and foreclosures.  Many people started to coin this revenue “phantom income” and thought it was unfair that they had to pay additional state taxes, especially after losing their homes and properties.

With the new measure, homeowners who filed 2009 tax returns did not have to pay taxes on the amount generated from the difference between their home sale prices and mortgage balances.  In order to be eligible for tax forgiveness, homeowners had to be Qualified Primary Residents and could not exceed $800,000 in indebtness or exceed $500,000 in forgive debt.

SB401 is a great win for many people in the state, including those who have filed for consumer bankruptcy and those who have completed or are considering short sales.  With SB401, people who decide to partake in short sales, or the Home Affordable Foreclosure Alternatives Program (HAFA), can do so without incurring additional tax consequences.  Now that these individuals do not have to worry about incurring a hefty tax bill, they have the freedom to make financial decisions that will suit their best interests instead of worrying about tax penalties.

If you would like to learn more about SB401 and how it can make the short sale process easier for you, we encourage you to speak with our knowledgeable specialists by calling 1-888-500-2632.  We would be happy to discuss SB401 with you and can provide advice on both short sales and loan modifications, ultimately allowing you to pursue of a course of action that is most beneficial for you and your family.

Up until recently, President Obama’s plan to counterattack the foreclosure crises in the United States was to keep homeowners in their homes.  Now, the plan has changed as the Obama Administration is looking to help homeowners sell their homes at a loss.  Under the short sale program, homeowners that have defaulted on their mortgages will get paid to leave their homes. 

In an article entitled Program Will Pay Homeowners to Sell at a Loss for the New York Times, author David Streitfeld writes, “This latest program, which will allow owners to sell for less than they owe and will give them a little cash to speed them on their way, is one of the administration’s most aggressive attempts to grapple with a problem that has defied solutions.”  Streitfeld also says that, “More than five million households are behind on their mortgages and risk foreclosure.” 

This alarming number prompted the Obama Administration to launch a $75 million mortgage modification plan, but the initiative was only successful at helping very few homeowners.  For example, in the month of October, 500,000 people tried to modify their home loans, but only 2,000 were successful at obtaining permanent loan modifications (New York Times).

With millions of homeowners in the U.S. on the verge of losing their homes, the government needs to take action or the crises will escalate.  It seems that the government’s response is the new short sale program, which is scheduled to begin on April 5, 2010.  Instead of trying to obtain loan modifications, homeowners will now be encouraged partake in short sales. 

The new plan is supposed to make the short sale process easier for both homeowners and mortgage lenders.  In the past, many homeowners complained that mortgage lenders and banks had made the short sale process an utter nightmare by refusing to accept offers from buyers.  Now, banks will be asked to accept offers, even if they are for less than what they expect.

The program has many benefits for homeowners and communities.  For example, homeowners will not have to worry about incurring damage to their credit ratings because they will avoid foreclosure.  Communities will have less foreclosed properties and instances of vandalism.  Yet, even though there are many pros and a short sale boom seems eminent in 2010, lenders are wary and anticipate fraud.  They also do not want to sell properties at a loss.  To them, it is just bad business and the program presents great risks.

At American Economic Solutions, we think that it is about time that the government passes an initiative that addresses the issues homeowners are confronted with in this tough economy.  So much has already been done to help banks and lenders.  Now it is time to focus on what the middle-class needs, better foreclosure solutions and compliance from mortgage lenders.  We are very excited about the possibilities the new short sale program presents and are looking forward to helping homeowners avoid foreclosure.