Housing Market Not Rebounding

Housing Market Not Rebounding

According to this USA Today article, Can home market bounce back without more help?, high foreclosures, high unemployment and short-term government housing stimulus programs (i.e. expanded FHA, expanded Fannie Mae and Freddie Mac, the $1.25 trillion mortgage securities buying program, the home buyer tax credit, etc.) will continue to challenge the housing market and may not be enough to turn housing prices around in the near future. While the article quotes experts on both sides of the housing market rebounding/not rebounding issue, it seems to me that those saying that the housing market is rebounding are only quoting housing market sales figures, sales prices, inventory, etc. without considering the forces behind those figures. For example, if the first home buyer tax credits are spurring 30% of all home sales (as stated in the article), then you cannot use the home sales, home prices and inventory figures as proof the housing market is rebounding since the tax credit is responsible for a significant portion of the sales activity. Given that this tax credit goes away on 4/30/2010, it is not a long term demand driver. Also, the government's $1.25 trillion mortgage securities buying program will end in April 2010 so that is another artificial stimulus that will disappear with the result of higher interest rates and lower demand. Therefore, in my opinion, this "housing market rebound" is a mirage and will disappear once these artificial stimulus actions end. See my post Our Phony Real Estate Market for more information.

Below are some interesting quotes from the real estate experts mentioned in the article:

• Lawrence Yun, chief economist at the National Association of Realtors (NAR) - "Right now, we're not in a sustaining recovery. We're on the cusp of a self-sufficient recovery, but we're not there yet." Well, at least Lawrence got some truth into that statement even though he ended it with Realtor spin.
• Mark Zandi, chief economist at Moody's Economy.com - "Foreclosures will be high for a long time and property values won't increase. Many (homeowners) are underwater and are at high risk of defaulting. There are a lot of foreclosed properties in the pipeline that will limit the market and depress prices."

In short, there are no positive sustainable demand forces in the housing market. The tax credits will go away and the government mortgage market propping will end resulting in higher interest rates. The only sustainable housing market forces are high foreclosures, high unemployment and too much debt. All these forces mean more problems ahead for the housing market.

If you are a Middle TN homeowner, property owner, condo owner, real estate investor, home builder or real estate developer who cannot pay your mortgage payments (due to losing your job, having your income reduced, illness, health problems, adverse business conditions, slow sales, loss of investment property tenants, vacancy issues, lack of funds to complete the project, feuding business partners, etc.), know that you will not be able to pay your mortgage, have defaulted on your mortgage, are already in foreclosure, or owe more than your home is worth, please contact me to discuss your options including a loan modification and a short sale (a real estate short sale occurs when the sale proceeds are not sufficient to pay off all the mortgages and liens on the property/home). I am a Middle Tennessee distressed real estate, short sale, pre-foreclosure (preforeclosure) and foreclosure REALTOR and Expert. I primarily help sellers (homeowners, property owners, condo owners, owners of high end homes and properties (estate homes, luxury homes and executive homes), real estate investors, home builders and real estate developers) of distressed real estate, short sales, pre-foreclosures, foreclosures, investment properties, failed new construction projects and struggling commercial real estate developments located in Middle Tennessee (Rutherford County TN, Williamson County TN, Davidson County TN, Robertson County TN, Maury County TN, Murfreesboro TN, Smyrna TN, La Vergne TN, Eagleville TN, Lascassas TN, Rockvale TN, Christiana TN, Brentwood TN, Franklin TN, Nashville TN, Belle Meade TN, Nolensville TN, Spring Hill TN, Gallatin TN, Springfield TN and Mt. Juliet TN).  If you do need to short sell your home or property, or you need a quick sale due to being in foreclosure, you can request short sale and foreclosure help and assistance on my website at Get Short Sale and Foreclosure Help and Assistance from a Middle Tennessee Short Sale and Foreclosure REALTOR and Real Estate Expert.

Tax Implications of Short Sales, Foreclosures and Other Debt Forgiveness

Tax Implications of Short Sales, Foreclosures and Other Debt Forgiveness

Please let me preface this post by saying that I am not qualified to give tax or legal advice. Therefore, please seek the advice of a tax attorney or accountant regarding any legal or tax related issues. Now that we have that out of the way, the purpose of this blog post is to help people determien the federal tax implications and federal tax consequences of short sales, foreclosures and other debt forgiveness. According to IRS article, The Mortgage Forgiveness Debt Relief Act and Debt Cancellation, "Qualified principal residence indebtedness" is exempt from federal income tax. According to the article, "This is the exception created by the Mortgage Debt Relief Act of 2007 and applies to most homeowners." The article cites IRS news release, IR-2008-17: Mortgage Workouts, Now Tax-Free for Many Homeowners; Claim Relief on Newly-Revised IRS Form, IRS Publication 4681: Canceled Debts, Foreclosures, Repossessions, and Abandonments (for Individuals) and IRS Form 982: Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment) as source documents.

According to IRS Publication 4681: Canceled Debts, Foreclosures, Repossessions, and Abandonments (for Individuals), "You can exclude canceled debt from income if it is qualified principal residence indebtedness. Qualified principal residence indebtedness is any debt incurred in acquiring, constructing, or substantially improving your principal residence and which is secured by your principal residence. Qualified principal residence indebtedness also includes any debt secured by your principal residence resulting from the refinancing of debt incurred to acquire, construct, or substantially improve your principal residence but only to the extent the amount of debt does not exceed the amount of the refinanced debt."  In other words, if the debt in question is original acquisition (purchase) debt then you will not owe taxes on the debt forgiven.  However, if you refinanced and pulled cash out, the tax implications of that debt forgiveness will depend on what the refinance proceeds were used for and how much was pulled out.  For example, if you refinanced and used all the refinance proceeds to renovate the home then you would not owe any tax on the debt forgiven.  However, if you pulled cash out then you would owe tax on the debt forgiven above and beyond the original acquisition debt balance.  Of course, the situation gets even more complicated if you refinanced several times and pulled cash out each time and used some of that money to make improvements to the home.  That is why it is important to contact a tax attorney or accountant to determine the tax consequences of a short sale, foreclosure, or other debt forgiveness. Please be sure to have your tax professional fill out and file IRS Form 982: Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment) with you tax returns.

If you are a Middle TN homeowner, property owner, condo owner, real estate investor, home builder or real estate developer who cannot pay your mortgage payments (due to losing your job, having your income reduced, illness, health problems, adverse business conditions, slow sales, loss of investment property tenants, vacancy issues, lack of funds to complete the project, feuding business partners, etc.), know that you will not be able to pay your mortgage, have defaulted on your mortgage, are already in foreclosure, or owe more than your home is worth, please contact me to discuss your options including a loan modification and a short sale (a real estate short sale occurs when the sale proceeds are not sufficient to pay off all the mortgages and liens on the property/home). I am a Middle Tennessee distressed real estate, short sale, pre-foreclosure (preforeclosure) and foreclosure REALTOR and Expert. I primarily help sellers (homeowners, property owners, condo owners, owners of high end homes and properties (estate homes, luxury homes and executive homes), real estate investors, home builders and real estate developers) of distressed real estate, short sales, pre-foreclosures, foreclosures, investment properties, failed new construction projects and struggling commercial real estate developments located in Middle Tennessee (Rutherford County TN, Williamson County TN, Davidson County TN, Robertson County TN, Maury County TN, Murfreesboro TN, Smyrna TN, La Vergne TN, Eagleville TN, Lascassas TN, Rockvale TN, Christiana TN, Brentwood TN, Franklin TN, Nashville TN, Belle Meade TN, Nolensville TN, Spring Hill TN, Gallatin TN, Springfield TN and Mt. Juliet TN).  If you do need to short sell your home or property, or you need a quick sale due to being in foreclosure, you can request short sale and foreclosure help and assistance on my website at Get Short Sale and Foreclosure Help and Assistance from a Middle Tennessee Short Sale and Foreclosure REALTOR and Real Estate Expert.

Finance Expert Blasts Fed

Finance Expert Blasts Fed

According to this Business Week article, Paulson Protege Pellegrini on Bernanke's Fed: "Sheer Lunacy", Paolo Pellegrini, the Rome-born analyst who helped hedge fund operator John Paulson make billions on the subprime crash of 2007-2008, thinks the Federal Reserve's (the Fed) low interest rate and money printing policies will fail since they just cause another distortion of the market (he actually uses the term "bubble") resulting in more problems. According to the article, Pellegrini believes that the recent signs of economic growth are just the result of the massive government stimulus programs (think the original stimulus bill, the omnibus bill, cash for clunkers, expanded FHA, expanded Fannie Mae and Freddie Mac, $1.25 trillion mortgage securities purchasing program, home buyer tax credit, etc.), and, as a result, the economy will decline again after the government stimulus programs end. I agree since you cannot solve a problem created by too much debt by taking on more debt. The result will be more loan defaults, foreclosures and bank failures. Real estate short sales may be the only thing that will help some banks survive.

If you are a Middle TN homeowner, property owner, condo owner, real estate investor, home builder or real estate developer who cannot pay your mortgage payments (due to losing your job, having your income reduced, illness, health problems, adverse business conditions, slow sales, loss of investment property tenants, vacancy issues, lack of funds to complete the project, feuding business partners, etc.), know that you will not be able to pay your mortgage, have defaulted on your mortgage, are already in foreclosure, or owe more than your home is worth, please contact me to discuss your options including a loan modification and a short sale (a real estate short sale occurs when the sale proceeds are not sufficient to pay off all the mortgages and liens on the property/home). I am a Middle Tennessee distressed real estate, short sale, pre-foreclosure (preforeclosure) and foreclosure REALTOR and Expert. I primarily help sellers (homeowners, property owners, condo owners, owners of high end homes and properties (estate homes, luxury homes and executive homes), real estate investors, home builders and real estate developers) of distressed real estate, short sales, pre-foreclosures, foreclosures, investment properties, failed new construction projects and struggling commercial real estate developments located in Middle Tennessee (Rutherford County TN, Williamson County TN, Davidson County TN, Robertson County TN, Maury County TN, Murfreesboro TN, Smyrna TN, La Vergne TN, Eagleville TN, Lascassas TN, Rockvale TN, Christiana TN, Brentwood TN, Franklin TN, Nashville TN, Belle Meade TN, Nolensville TN, Spring Hill TN, Gallatin TN, Springfield TN and Mt. Juliet TN).  If you do need to short sell your home or property, or you need a quick sale due to being in foreclosure, you can request short sale and foreclosure help and assistance on my website at Get Short Sale and Foreclosure Help and Assistance from a Middle Tennessee Short Sale and Foreclosure REALTOR and Real Estate Expert.

Increasing Jumbo Loan Defaults

Increasing Jumbo Loan Defaults

According to this Bloomberg article, Moody’s Reviews $143 Billion of Jumbo-Mortgage Bonds (Update1), Moody's Investor Services is currently reviewing a $143 billion pool of jumbo mortgage (mortgage loans in excess of $417,000 in most places, or $729,750 in more expensive areas) backed bonds with likely credit downgrades due to "the rapidly deteriorating performance of jumbo pools in conjunction with macroeconomic conditions that remain under duress." In other words, due to rapidly increasing jumbo mortgage loan defaults, the securities that are backed by these loans are now worth less than before. According to article, home prices, especially higher end homes will continue to decline with the $1.6 trillion market for jumbo mortgage backed bonds declining as a result. A lot more jumbo mortgage loan losses are coming along with more short sales and foreclosures.

If you are a Middle TN homeowner, property owner, condo owner, real estate investor, home builder or real estate developer who cannot pay your mortgage payments (due to losing your job, having your income reduced, illness, health problems, adverse business conditions, slow sales, loss of investment property tenants, vacancy issues, lack of funds to complete the project, feuding business partners, etc.), know that you will not be able to pay your mortgage, have defaulted on your mortgage, are already in foreclosure, or owe more than your home is worth, please contact me to discuss your options including a loan modification and a short sale (a real estate short sale occurs when the sale proceeds are not sufficient to pay off all the mortgages and liens on the property/home). I am a Middle Tennessee distressed real estate, short sale, pre-foreclosure (preforeclosure) and foreclosure REALTOR and Expert. I primarily help sellers (homeowners, property owners, condo owners, owners of high end homes and properties (estate homes, luxury homes and executive homes), real estate investors, home builders and real estate developers) of distressed real estate, short sales, pre-foreclosures, foreclosures, investment properties, failed new construction projects and struggling commercial real estate developments located in Middle Tennessee (Rutherford County TN, Williamson County TN, Davidson County TN, Robertson County TN, Maury County TN, Murfreesboro TN, Smyrna TN, La Vergne TN, Eagleville TN, Lascassas TN, Rockvale TN, Christiana TN, Brentwood TN, Franklin TN, Nashville TN, Belle Meade TN, Nolensville TN, Spring Hill TN, Gallatin TN, Springfield TN and Mt. Juliet TN).  If you do need to short sell your home or property, or you need a quick sale due to being in foreclosure, you can request short sale and foreclosure help and assistance on my website at Get Short Sale and Foreclosure Help and Assistance from a Middle Tennessee Short Sale and Foreclosure REALTOR and Real Estate Expert.

Fannie Mae and Freddie Mac Need More Government Aid

Fannie Mae and Freddie Mac Need More Government Aid

According to this Bloomberg article, Fannie, Freddie Overseer May Seek More Treasury Aid (Update2), the annual dividend payments owed by Fannie Mae and Freddie Mac (Government Sponsored Entities, or GSE's) to the US treasury exceed the total earned by both GSE's, and as a result, the GSE's are actually needing to borrow more bailout money from the US Treasury in order to pay the annual dividend payments they owe the US Treasury. Unfortunately, this sounds all to familiar. You cannot become a profitable company by borrowing more to pay your current debts. It is a recipe for more financial disaster. No doubt that this is all due to the incredibly high number of bad loans and foreclosures. The article states "Treasury and Federal Housing Finance Agency officials are also debating whether to lower the mortgage-finance companies’ dividend payments on their Treasury borrowings, according to these people, who requested not to be identified describing the internal deliberations. Fannie Mae and Freddie Mac, the largest sources of mortgage money in the U.S., have used $111.6 billion of their $400 billion in backup financing in less than a year. The companies say their 10 percent annual dividend payment, which comes to about $5 billion each, costs more than either have earned in most years and adds to their draws on Treasury." According to the article, the US treasury is considering reducing the GSE's annual dividend payments in order to prevent the need for another government bailout. This all seems like a lot of wasted time, energy and money to keep 2 insolvent GSE's from failing.

If you are a Middle TN homeowner, property owner, condo owner, real estate investor, home builder or real estate developer who cannot pay your mortgage payments (due to losing your job, having your income reduced, illness, health problems, adverse business conditions, slow sales, loss of investment property tenants, vacancy issues, lack of funds to complete the project, feuding business partners, etc.), know that you will not be able to pay your mortgage, have defaulted on your mortgage, are already in foreclosure, or owe more than your home is worth, please contact me to discuss your options including a loan modification and a short sale (a real estate short sale occurs when the sale proceeds are not sufficient to pay off all the mortgages and liens on the property/home). I am a Middle Tennessee distressed real estate, short sale, pre-foreclosure (preforeclosure) and foreclosure REALTOR and Expert. I primarily help sellers (homeowners, property owners, condo owners, owners of high end homes and properties (estate homes, luxury homes and executive homes), real estate investors, home builders and real estate developers) of distressed real estate, short sales, pre-foreclosures, foreclosures, investment properties, failed new construction projects and struggling commercial real estate developments located in Middle Tennessee (Rutherford County TN, Williamson County TN, Davidson County TN, Robertson County TN, Maury County TN, Murfreesboro TN, Smyrna TN, La Vergne TN, Eagleville TN, Lascassas TN, Rockvale TN, Christiana TN, Brentwood TN, Franklin TN, Nashville TN, Belle Meade TN, Nolensville TN, Spring Hill TN, Gallatin TN, Springfield TN and Mt. Juliet TN).  If you do need to short sell your home or property, or you need a quick sale due to being in foreclosure, you can request short sale and foreclosure help and assistance on my website at Get Short Sale and Foreclosure Help and Assistance from a Middle Tennessee Short Sale and Foreclosure REALTOR and Real Estate Expert.

Former Bank Executives Want to Buy Failed Banks

Former Bank Executives Want to Buy Failed Banks

According to this Reuters article, Some ex-bank execs want into FDIC auctions, former bank executives are raising investment funds to acquire failed financial banks. While the FDIC has not been willing to approve many such private equity deals thus far (almost all of the failed banks/financial institutions have been taken over by other banks/financial institutions), the article quotes Paul Miller, FBR Capital Markets analyst at Reuters Global Finance Summit, as saying the FDIC will likely become more receptive to private equity acquisitions of failed banks/financial institutions since "There's just not enough good banks to take over all the bad banks. We're going to see more of these groups bid right alongside other banks." I agree. There are definitely not enough "good banks." That is one of our problems. I just hope that the banks/financial institutions or private equity groups that take over the failed banks/financial institutions are sensible and willing to work with homeowners who want to short sell their homes.

If you are a Middle TN homeowner, property owner, condo owner, real estate investor, home builder or real estate developer who cannot pay your mortgage payments (due to losing your job, having your income reduced, illness, health problems, adverse business conditions, slow sales, loss of investment property tenants, vacancy issues, lack of funds to complete the project, feuding business partners, etc.), know that you will not be able to pay your mortgage, have defaulted on your mortgage, are already in foreclosure, or owe more than your home is worth, please contact me to discuss your options including a loan modification and a short sale (a real estate short sale occurs when the sale proceeds are not sufficient to pay off all the mortgages and liens on the property/home). I am a Middle Tennessee distressed real estate, short sale, pre-foreclosure (preforeclosure) and foreclosure REALTOR and Expert. I primarily help sellers (homeowners, property owners, condo owners, owners of high end homes and properties (estate homes, luxury homes and executive homes), real estate investors, home builders and real estate developers) of distressed real estate, short sales, pre-foreclosures, foreclosures, investment properties, failed new construction projects and struggling commercial real estate developments located in Middle Tennessee (Rutherford County TN, Williamson County TN, Davidson County TN, Robertson County TN, Maury County TN, Murfreesboro TN, Smyrna TN, La Vergne TN, Eagleville TN, Lascassas TN, Rockvale TN, Christiana TN, Brentwood TN, Franklin TN, Nashville TN, Belle Meade TN, Nolensville TN, Spring Hill TN, Gallatin TN, Springfield TN and Mt. Juliet TN).  If you do need to short sell your home or property, or you need a quick sale due to being in foreclosure, you can request short sale and foreclosure help and assistance on my website at Get Short Sale and Foreclosure Help and Assistance from a Middle Tennessee Short Sale and Foreclosure REALTOR and Real Estate Expert.