Orlando Florida Real Estate Blog

With today’s reduced property values and increased unemployment, it’s tempting for some homeowners to just throw their hands up in defeat, allow the bank to take their home in foreclosure and rid themselves of the monthly mortgage burden.

Even suffering through the paperwork and stress of a short sale may seem too much for an overwhelmed borrower to handle.

But Florida homeowners should be aware of unique rules in the state that make the benefits of a short sale typically outweigh the ease of walking away in a foreclosure.

The biggest difference between Florida and many other states when it comes to losing a home is the deficiency judgment.

While some states ban lenders from collecting the remainder owed on a loan after a foreclosure or short sale is completed, Florida law allows banks to go after borrowers for up to 20 years. That can lead to a garnishment of wages long after the home is gone.

In a short sale, where the bank agrees to take a lesser amount for the home than what is owed on a loan, lenders sometimes are willing to write off the deficiency on the front end.

In a majority of the cases I’ve handled, the bank has waived its right to seek a deficiency. However, we are seeing this year that the lenders are more reluctant to do so.

That was the case with Kissimmee resident Scott & Teresa, who in 2010 found themselves in a home the couldn’t afford.

Following a loss of employment, and with two children, Scott & Teresa bought a $235,000 home that they lived in comfortably for a 4 years. But then one of them lost their job.

Teresa remembers the day the bank served the notice of foreclosure.

“I cried my eyes out,” Teresa said. “That’s when I panicked because I really didn’t want it to happen.”

Scott & Teresa got advice from Jerry LaRose on doing a short sale.

Their bank, CitiMortgage, waived its right to seek a deficiency even though it ended up taking $150,000 less than what was owed on the loan.

Also, if a bank refuses to waive the deficiency in a short sale, it still would have to go back to court to seek a judgment.

In a foreclosure, at the end of the proceeding, a deficiency judgment is automatically awarded by the courts and the bank is free to seek a claim.

“In the past, people just wanted to move from the property and get on with their lives and didn’t understand what the lenders’ rights were in terms of pursuing a deficiency claim, I think people are more aware now about what can happen after the fact and that their nightmare can continue.”

Another consideration is the effect of a foreclosure or short sale on credit.

According to the Fair Isaac Corp., which developed the widely used measurement of credit risk called a FICO score, the negative effect of a foreclosure is marginally worse than a short sale.

But in Florida, a deficiency judgment from a foreclosure is likely to have a much larger impact that will prohibit your ability to buy another home for many years. Currently, Fannie Mae states that you may purchase another home after only years after completing a short sale. Whereas a Foreclosure they say you would have to wait 5 Years.

There are a few situations where some experts believe it is better for someone to go to foreclosure rather than do a short sale. I always suggest to consult an attorney at that point.

To do a short sale, a borrower must give all of his or her financial information to the bank before it will decide whether to allow the short sale. The idea is that if a person can afford to pay the mortgage, the short sale may be denied.

“Now the lender knows everything about your finances and they can better decide whether they will go after you or not.

If a lender doesn’t know your finances, it reduces the chances it will go after you following a foreclosure.

You might fly under the radar, With the millions of people going through this, they are probably going to go after the low-hanging fruit.

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Jerry LaRose is an Orlando Area Residential Real Estate Expert, who can assist you with the purchase and/or sale of Real Estate in Orlando, Windermere, Winter Garden, Kissimmee, St. Cloud, East Orlando, Longwood, Altamonte Springs, Maitland, Winter Park, Oviedo, Apopka, Lake Mary, Clermont, Ocoee Florida or any place in the country. Jerry has created a team of professionals throughout Orlando and the country to ensure that you enjoy a smooth transition to your new area. Please visit http://OrlandoShortSaleExpert.com or www.JerrySellsOrlando.com for your real estate needs. Please give me a call if you have questions about the Orlando and Central Florida real estate market.

P.S. If you are listing your home as a short sale in Orange, Seminole, Polk, Lake or Osceola County Florida and Orlando, East Orlando, St. Cloud, Davenport, Clermont, Longwood, Windermere, Winter Garden, Kissimmee, Winter Park, Altamonte Springs, Maitland, Apopka, Lake Mary, Oviedo or Ocoee Florida make sure you hire an agent who knows how to do short sales and has the experience to get the job done. We are doing successful short sale packages. Call us at 407-580-7011 to find out more about Orange County Short Sales and Orlando Area Short Sales.

When do I need to purchase to qualify?
If you buy a home between Jan. 1 and Dec. 1 this year and close escrow during these dates, you will qualify for an $8,000 tax credit - as long as it is your primary residence and you meet the simple requirements.

How does the law define "first-time homebuyer"?
The law defines "first-time homebuyer" as a buyer who has not owned a principal residence during the three-year period prior to the purchase.

What are other requirements to qualify?
All U.S. citizens who file taxes are eligible to participate. An income limit of $75,000 a year for individuals and $150,000 a year for joint filers also applies.

How do I apply for the credit?
Taxpayers should use IRS Tax Form 5450 to claim the first-time homebuyer tax credit.

Does the credit have to be repaid?
No. Unlike a similar tax credit passed in 2008, this $8,000 tax credit does not have to be repaid to the IRS.

Can I use the tax credit toward a down payment or other closing costs?
Yes. An announcement made May 29 allows the tax credit to be used toward purchase costs of a home, including down payment in some cases. This can be done one of two ways. First, buyers using an FHA-approved lender can sell their anticipated tax credit to the lender and use the proceeds to immediately apply the tax credit to any down payment above the minimum down payment of 3.5 percent required with FHA-insured mortgages. Second, buyers who receive financing through state housing finance agencies and certain non-profits will be able to use the tax credit for their down payments via a tax credit advance loan that does not result in any cash back to the buyer.

Orlando Real Estate Expert Testimonial

As part of its plan to stimulate the U.S. housing market and address the economic challenges facing our nation, Congress has passed legislation that grants a tax credit of up to $8,000 to first-time home buyers.

Here is more information about how the 2009 First-Time Home Buyer Tax Credit can help prospective home buyers become part of the American dream.

Breaking news: HUD: Home Buyer Tax Credit Loans Still on Track (REALTOR® Magazine)

Who Qualifies?

First-time home buyers who purchase homes between January 1, 2009 and December 1, 2009.

To qualify as a “first-time home buyer” the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase.

Which Properties Are Eligible?

The 2009 First-Time Home Buyer Tax Credit may be applied to primary residences, including: single-family homes, condos, townhomes, and co-ops.

How Much Will the Credit Be?

The maximum allowable credit for home buyers is $8,000. Each home buyer’s tax credit is determined by two factors:

The price of the home—the credit is equal to 10% of the purchase price of the home, up to $8,000.

The buyer's income—single buyers with incomes up to $75,000 and married couples with incomes up to $150,000—may receive the maximum tax credit.

If the Buyer(s)’ Income Exceeds These Limits, Can He/She Still Get a Credit?

Yes, some buyers may still be eligible for the credit.

The credit decreases for buyers who earn between $75,000 and $95,000 for single buyers and between $150,000 and $170,000 for home buyers filing jointly. The amount of the tax credit decreases as his/her income approaches the maximum limit. Home buyers earning more than the maximum qualifying income—over $95,000 for singles and over $170,000 for couples are not eligible for the credit.

Will the Tax Credit Need to Be Repaid?

No. The buyer does not need to repay the tax credit, if he/she occupies the home for three years or more. However, if the property is sold during the three-year period, the credit will be recouped on the sale.

First Time Homebuyers

It is an historic time for first time homebuyers. The government, in an effort to stimulate our economy, is giving away money to first time homebuyers.  It sounds to good to be true, but I assure you it's not.  I have provided a quick link to the Federal Housing Tax Credit for First-Time Home Buyers website, as well as a quick video that explains the credit.  If you have any questions about this great stimulus, don't hesitate to contact us directly.  Don't wait too long, this will only last through the end of the year.

Federal Housing Tax Credit Explained

OK, I'm going out on a limb here!

After more than a year of free-falling sales and prices, Orlando’s battered housing market is getting support from both first-time home buyers and investors taking advantage of record foreclosures and distress sales across the region.Sales and how they work.Orlando area sales.Orlando market, and bankers are saying yes more often to short sales, which spare them the expense of a full-blown foreclosure.

With mortgage-interest rates at record lows and an $8,000 tax credit for buyers who haven't owned a home for at least the past three years, existing-home sales in the region have started rising again compared with a year ago. And half the deals involve bank-owned foreclosures or "short sales" — properties for which the bank has agreed to take less than the amount owed on the mortgage. Throughout this blog you can find much more information on Short

Who's buying them? Anecdotal reports and a few surveys indicate that first-time home buyers, who don't have to worry about selling an existing property, and investors venturing into the second-home market for the first time or searching for bargains to add to their inventory, are responsible for most of the

Bulk auctions of both homes and condominiums are creating buzz in the local

Lenders are becoming more responsive. However, the short-sale process still remains slower and more cumbersome than a regular, open-market sale between a willing seller and a qualified buyer. The timing even though is better still encompasses a 4-6 month time frame in general. Therefore, Now is the time to buy. We are at or near the bottom of this cycle and there is little room for prices to continue to drop. Yes, prices in some area may continue to fall but as a general market I feel prices are ready to start stabilizing. Now, that doesn’t mean they’re headed up any time soon. I feel that we are at or near the bottom and we’ll drag along the bottom here possibly for several months before we start showing a modest increase. When price start to grow, I feel that the new growth will be at a 2-5% rate in general. Some areas more, some area less. So, Orlando buyers let’s BUY some property.

Jerry LaRose is an Orlando Area Residential Real Estate Expert, who can assist you with the purchase and/or sale of Real Estate in Orlando, Windermere, Winter Garden Florida or any place in the country. Jerry has created a team of professionals throughout Orlando and the country to ensure that you enjoy a smooth transition to your new area. Please visit http://OrlandoShortSaleExpert.com or www.JerrySellsOrlando.com for your real estate needs.  Please give me a call if you have questions about the Orlando and Central Florida real estate market.

P.S. If you are listing your home as a short sale in Orange County Florida and Orlando, Windermere, Winter Garden,  or Ocoee Florida make sure you hire an agent who knows how to do short sales and has the experience to get the job done. We are doing successful short sale packages. Call us at 407-580-7011 to find out more about Orange County Short Sales and Orlando Area Short Sales.