Realtors for Ventura | Oxnard | Camarillo

Today’s Saturday, and having just come back from New Orleans, I’m catching up on stuff at the office.

Leslie saved all my Wall Street Journals and the LA Times (I love reading the papers) and the main article in the Business section of last Friday’s LA Times caught my eye. It said the tax exemption on principal reduction (such as on short sales) expires December 31st and “struggling homeowners who obtain reductions in their mortgage debt face a new obstacle starting next year – a bill for taxes on that aid”.

Many of us Realtors have known about this for quite a while and have been beating the drum in warning homeowners about this huge, potential “gotcha”.  Realtors are pushing hard to get this law extended, but with the election in November, gridlock in Congress, a potentially new President, etc, no one is sure what will happen.

If you are wondering about your own personal situation, don’t delay understanding these implications and determining your course of action. If the law expires, and you obtain mortgage debt relief in 2013, you may be taxed on that debt relief as though it were cash income to you. As always, Realtors can not provide legal or tax advice so please consult with your own tax adviser.

Just got back from 10 days in Louisiana doing FEMA home inspections as a contract inspector.  In those 10 days I did 58 home inspections in the New Orleans area and then up I-55 to the Hammond area.

Last year I worked in both New York state and New Jersey for about 3 weeks after hurricane Irene.

After Katrina, many men (and women) from Ventura made one week volunteer work trips down to the Gulf area, and our teams focused primarily on Pascagoula, MS. Last Saturday I had a few hours off in the afternoon, so I drove over to Pascagoula and literally made cold calls on some of widows, single moms and families (with disabled children) on whose homes we’d worked.

What a great time – after 6 years – to see and visit with them! Literally thousands of workers from all over the country came down to the Gulf to help in the restoration work. On Linda’s home, I helped one week to install a new roof under the leadership of a roofing contractor from Ohio who drove down with all his tools.

Leslie joined me on our last trip and connected with the women who were still traumatized by the flooding (flood surge), listening to their stories and experiences.

Isaac this year wasn’t like Katrina at all – primarily heavy rains and trees blown down, but still some homes were badly damaged by localized flooding (outside the levee system). We literally worked from sun-up to sun-down to rapidly cover our assignments, then would spend the evening making calls for appointments the next day. In a perverse way, these deployments are a “vacation” for me because they so focus me on the immediate needs that I forget all about life back in Ventura. I just wouldn’t want to do it every day!

Last Thursday’s Los Angeles Times business section article started out:

“Real estate website Zillow has a provocative data point for every renter thinking about buying these days: That move pays off after just three years on average nationwide.”

The Times said that it’s 3.2 years for us in Ventura County.

That’s another sign or reason why so many investors are snapping up real estate today.

Leslie and I spent the day yesterday attending a continuing education class that focused on short sales, and were reminded that a major federal law is expiring at the end of the year that affects homeowners facing financial distress.

This temporary law (Mortgage Debt Relief Act of 2007) was meant to provide relief to homeowners who were foreclosed upon, or more commonly today, chose to do a short sale.

When debt is forgiven, that forgiven debt is counted as income and is generally taxable. So in layman’s terms, a homeowner who has a $500,000 mortgage but sells his home in a short sale, and his lender gets $400,000 (vice the $500k), that homeowner in the eyes of the IRS received a $100,000 gift which is taxable income. But the Mortgage Debt Relief Act waived that rule for homeowners who’ve suffered financial hardship in this economic downturn and been forced to do a short sale (or foreclosure).

But in less than 5 months, unless Congress acts, homeowners in financial distress will lose that IRS benefit.

With many short sales taking 5 months or longer to close, a lot of homeowners are going to be in for a big shock in January when presented with a huge 1099 and potentially no more relief from the IRS. Read the rest of this article »

Looking at both the quarterly and monthly numbers, there’s no doubt we’re seeing a decline in foreclosures. I wouldn’t be surprised if it’s a rocky road with occasional spikes upward, but there’s a big push to help distressed homeowners “somehow” – either through loan mods, short sales or whatever – and that’s having an effect.

Here’s the monthly chart for June

Here’s the quarterly chart, through the second quarter, 2012