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Taxes for that Sacramento Short Sale
Time is running out to avoid paying taxes on a Sacramento short sale. The 2007 Mortgage Forgiveness Debt Relief Act expires on December 31, 2012. This is the law that exempts a short sale seller from paying taxes on forgiven debt for a personal residence. Will the law be extended? Most likely, if the past is any indication and the future continues to be as uncertain as it is. You know how they say history repeats itself. That’s because it does. And we have an election year. It’s in the 2013 budget.
Some of you may not recall what happened last go-around with this short sale tax issue. When it expired, it was not renewed right away for the following year. Sellers were closing short sales fearing the worst: that not only did they lose their home, but now the government would be sticking outs its hand and taxing them on the short fall difference. We had California taxes to deal with at the same time. It was a scary problem. Congress dinged around on the short sale taxation extension and finally granted the extension. Then our California exemption came through, too. Just in time for taxes. And it was made retroactive. We were all biting our fingernails.
I am working on a Bank of America HAFA short sale. Yeah, I know, I’m a sucker for punishment. I have a few of them. You can read all the government rules for HAFA about the timeframes to process a HAFA short sale, and they are pretty much meaningless. It takes Bank of America a good 4 months, on average, to approve a HAFA short sale. If you’re teamed up with a Green Tree mortgage in second position, God help you. Green Tree closes files after 90 days. So, you can see the problem. Not only that, but after 6 months, Green Tree sends its loans to charge off. It’s better not to have a short sale charge off if you can avoid it.
This particular seller is very concerned that she won’t close this year. I believe she will. It’s been 9 months already. You can get pregnant and give birth in that period of time. Bring a tiny new life form into being. But that HAFA short sale at Bank of America can’t close within a reasonable timeframe.
Your safest bet is to close your short sale escrow within the confines of the 2012 calendar year. That way there is no question. But if you have to rollover into 2013, do so knowing it’s a risk. Although, a calculated risk. Do you think the government will hang all of these short sellers out to dry? This Sacramento short sale agent says probably not. Not if history repeats itself.
Take Xanax for a Bank of America HAFA Short Sale
In some Sacramento short sales, I want to grab an ax and hack Bank of America into itsy bitsy pieces. Hey, don’t call the cops. In other short sales, I’m littering the doorway with rose petals. There is no one-size-fits-all explanation when it comes to a Bank of America short sale. But there is also no middle ground. No median. It reminds me of that nursery rhyme about the girl with the curl in the middle of her forehead. When a Bank of America short sale is good, it’s very very good. When the short sale is bad, it’s horrid.
I tell my short sale sellers in Sacramento that there are two kinds of customer service reps at Bank of America: the brilliant and the morons. Nobody in between. They always laugh, but they and I know it’s the truth. I am also at an advantage with that statement because I know by the time a seller gets to me, that seller is pretty much ticked off at Bank of America. That seller has probably tried to do a loan modification and failed, often miserably. I don’t have to do much to poke the hornet’s nest and find common ground.
By the time a seller calls this Sacramento short sale agent, the seller is often exhausted, tired and angry. Oh, they can try to disguise their anger, and most do try to be polite, but I hear it in the cracking sounds of their voice and I see it in the fire raging behind their eyes. Bank of America has pushed them over the edge. They’re not even sure if they want to do the short sale because they are worried it will favor Bank of America in some way. Or, that the bank will reject their short sale. There’s fear and loathing. Believe me, I understand and empathize.
Moving a Bank of America short sale forward has its roots in patience. In not expecting too much from bank employees. Lowered expectations is key. Especially for a Bank of America HAFA short sale. A HAFA can expire. You’ve got about 4 months to close a HAFA. When you have a Bank of America HAFA coupled with a Green Tree second mortgage, that’s a lovely treat. Because Bank of America will take so long to approve the short sale, the Green Tree file will close. Green Tree keeps its files open for 90 days, and then they close them.
Those pesky laws about time frames in a HAFA? Ha. Bank of America thumbs its nose at those laws and slaps your face twice with its glove.
By the time we received short sale approval from Bank of America for our last HAFA short sale, Green Tree was long gone. We reopened the file with Green Tree and pushed. More than 60 days later, Green Tree issued approval, but then the Bank of America HAFA had expired. Could the bank extend? Yes, but it refused. Instead, Bank of America closed the file and reopened it, started over from scratch. New RASS, new TOS, new BPO, new HUD, it’s a new day at Bank of America, and it’s welcome to more hell for these Sacramento short sale buyers and seller.
On Wednesday, I sent a Tweet to the Social Media team at Bank of America about this file. I’ve Tweeted them so many times over this that they ignored the Tweet. It’s very unusual not to get a call back from Bank of America. I think I wore out my Tweets. The negotiator noticed the ZIP code was wrong. She asked me to send her a change of address when it was Bank of America that entered the wrong ZIP code. Oh, please.
We have a buyer’s loan about to expire if we don’t close by the end of the month. We have the Green Tree second loan going to charge-off at the end of the month. And we have a Bank of America negotiator lamenting about a ZIP code on a file that had already been approved once. This was already an approved HAFA short sale at Bank of America! Slap the Xanax into my hand.
I hope that today is the day we receive the new approval for this Bank of America HAFA. That’s one thing you can count on from this Sacramento short sale agent, I never give up hope.
Bank of America Cooperative Short Sales vs HAFA Short Sale
Don’t ask a third-party vendor for Bank of America whether a Cooperative Short Sale is better than a HAFA short sale. Because I’ll bet you dollars to doughnuts the vendor will pick the HAFA. Doesn’t matter whether it’s DTS, REDC, AMS, and so forth, all the acronym companies, they’re all the same. Call me silly, but that’s what I see happening, even though the HAFA is not necessarily the better option. It’s possible that Bank of America would push / promote HAFAs as well because there might be more money to the bank through a HAFA.
When I open a Cooperative Short Sale in Equator, the first thing that happens is my requests for a Cooperative are ignored. The third-party vendors pursue the HAFA. I send emails that say do NOT review this for HAFA because the seller wants to pursue a Cooperative Short Sale. Then, I ask the seller to call the customer service number and repeat over and over Cooperative, like a mantra. If the customer service rep says HAFA, the seller is counseled to say “No, Cooperative.” Yet, the bank opens a HAFA anyway. You’ve gotta ask yourself, why is that? I’ll tell you why I think they’re doing it, and it’s not because they’re stupid, although you may disagree. It’s because there is probably more money in it for the bank.
Is the HAFA better for the seller? Speaking strictly for a California short sale seller the answer might be no. Let’s make it clear I am talking about a streamlined Cooperative, a short sale in which Bank of America has delegated authority to approve without financials. I have a certain Cooperative approved, and Bank of America is telling the seller that in order to do the Cooperative without financials, the seller must be 90 days delinquent to satisfy this particular investor. But in a regular Cooperative short sale, the seller is better off with the Cooperative over the HAFA.
Especially if the seller qualifies for the HIN Cooperative Short Sale, because that minimum payment starts at $5,000 and can go up to $30,000. A HAFA short sale maximum payment is $3,000. However, you can combine the two types of short sales, when you get right down to it, if you’re willing to submit financials and tax returns, and I’m getting approval on one of those in a few weeks.
But if you’re not willing to hand over your sensitive personal information and you just want to do the Cooperative Short Sale without financials, the Cooperative beats HAFA in the PITA classification every time. Some types of Cooperative short sales pay $2,500. Even when you take into consideration the $500 difference vs the PITA, let me tell you, a Cooperative short sale wins hands down. In fact, the only thing worse than a Bank of America HAFA short sale is a Bank of America HAFA Fannie Mae or Bank of America HAFA Freddie Mac short sale — with Freddie Mac HAFA having the slight edge for winning the crawling-through-broken-glass-naked award because it doesn’t use the ARASS.
If you’re got a choice, pick the Bank of America Cooperative short sale. Your Sacramento short sale agent will thank you. Your mother will thank you. Your doctor will thank you. And you’ll sleep better at night.
