Writing the Hardship Letter

Snow NeedlesThe California Association of REALTORS® recently provided us with a synopsis of a great article offering advice on writing a hardship letter in hopes of obtaining a short sale.  The bullet points below were provided by CAR and the link will provide access to the actual article written by Lisa Prevost with the New York Times.  We found it to be quite informative and wanted to share it with our readers.

  • Homeowners having trouble paying their mortgage are often required to write a hardship letter when applying for a loan modification.  Such a letter is a requirement for modification applications under the government’s Making Home Affordable program.
  • A hardship letter is not the basis for modification approval – that depends on the borrower’s financials and the intricacies of the various government and in-house lender programs.  The purpose of the hardship letter is to explain upfront why borrowers missed payments, and what they propose as a solution.
  • Some housing experts recommend that homeowners write short letters, using the philosophy that “less is more.”  The lenders’ loss mitigators, faced with mountains of modification requests, are unlikely to spend time reading more than the first few lines of each letter.  Also, there is the risk that borrowers who go on at length could unknowingly trip themselves up with unnecessary details that raise red flags for a mitigator.
  • The hardship letter should open with a succinct explanation of why the borrower stopped paying the mortgage.  The letter should cite a specific hardship, like a lost job, illness, or reduced income.
  • Next, the letter should briefly cite any steps the borrower took to avoid defaulting on their loan, like cutting household expenses or tapping in to savings.
    If the borrower’s financial situation has since improved, or is likely to, borrowers should mention that as evidence that their hardship was temporary and won’t hamper their ability to make payments on a modified loan.
  • Finally, the letter should state exactly what borrowers are applying for.  Is the proposed solution a lower interest rate, for example, or a principal reduction?
  • Borrowers who are underwater – those who owe more on their mortgage than their property is worth – may ask their lender to consider a short sale, in which the house is sold to another buyer for less than the amount owed.

READ THE FULL STORY

 

Lake Tahoe Real Estate & the Impact from the Current Avoidance of the “Fiscal Cliff”

realtorLake Tahoe real estate property owners should be interested in seeing how they could be affected by the recent H.R.8 legislation passed by both the Senate and the House this past January 1.  How so?  The National Association of REALTORS® released the following summary of the provisions within the bill that are related to real estate:

Real Estate Tax Extenders

  • Mortgage Cancellation Relief is extended for one year to Jan. 1, 2014
  • Deduction for Mortgage Insurance Premiums for filers making below $110,000 is extended through 2013 and made retroactive to cover 2012
  • 15-year straight-line cost recovery for qualified leasehold improvements on commercial properties is extended through 2013 and made retroactive to cover 2012
  • 10 percent tax credit (up to $500) for homeowners for energy improvements to existing homes is extended through 2013 and made retroactive to cover 2012

Permanent Repeal of Pease Limitations for 99% of Taxpayers

Under the agreement so called “Pease Limitations” that reduce the value of itemized deductions are permanently repealed for most taxpayers but will be reinstituted for high income filers.  These limitations will only apply to individuals earning more than $250,000 and joint filers earning above $300,000.  These thresholds have been increased and are indexed for inflation and will rise over time.  Under the formula, the amount of adjusted gross income above the threshold is multiplied by three percent.  That amount is then used to reduce the total value of the filer’s itemized deductions.  The total amount of reduction cannot exceed 80 percent of the filer’s itemized deductions.

These limits were first enacted in 1990 (named for the Ohio Congressman Don Pease who came up with the idea) and continued throughout the Clinton years.  They were gradually phased out as a result of the 2001 tax cuts and were completely eliminated in 2010-2012.  Had we gone over the fiscal cliff, Pease limitations would have been reinstituted on all filers starting at $174,450 of adjusted gross income.

Capital Gains

Capital Gains rate stays at 15 percent for those in the top rate of $400,000 (individual) and $450,000 (joint) return.  After that, any gains above those amounts will be taxed at 20 percent.  The $250,000/$500,000 exclusion for sale of principal residence remains in place.

Estate Tax

The first $5 million dollars in individual estates and $10 million for family estates are now exempted from the estate tax.  After that the rate will be 40 percent, up from 35 percent.  The exemption amounts are indexed for inflation.

Tahoe Paradise Neighborhood, So. Lake Tahoe- 2012 4th Quarter Real Estate Market Update

Tahoe Paradise

The South Lake Tahoe real estate report for the Tahoe Paradise neighborhood as of December 31, 2012 shows positive notes in all of the categories followed below. When comparing the fourth quarter of 2012 to the same period during 2011, we find that the number of closed sales rose slightly and the median sale price increased significantly. The time on the market was less for these sales and the dollar per square foot increased over the past year. The list to sale ratio also rose from 2011.  Following are the actual comparisons for the various categories mentioned above as compared to those reported in 2011.

2012 4th Quarter Comparison20122011
Number of Sales108
Median Home Price$321,000$193,500
Average List to Sale Ratio97.7%92.3%
Median Dollar Per Square Foot$178$122
Days on the Market76105

Current Market Conditions – January 4, 2013

As of January 4, 2013, the Tahoe Paradise neighborhood reports 4 homes on the market ranging from a minimum of $389,000 to $550,000.  The basic law of supply and demand is described in real estate terms as the “absorption rate.”  Absorption rate (or monthly supply of inventory) are a calculation based upon the rate of closed sales to active listings.  It is an accurate way to keep track of market trends.  A balanced market is when there is a six-month supply of homes indicating that there are enough inventories to supply the demand.  Less than six months is considered a seller’s market and greater than six months is a buyer’s market.  As of December 31, 2012 the Tahoe Paradise neighborhood is reporting an average monthly supply of 3.7 as compared to 6.5 at the same time in 2011.

The above information is taken from statistics provided by the South Lake Tahoe Association of REALTORS® Multiple Listing Services and while deemed to be accurate, are not guaranteed.

Pioneer Trail Neighborhood, So. Lake Tahoe- 2012 4th Quarter Real Estate Market Update

Pioneer Trail

The South Lake Tahoe real estate report for the Pioneer Trail neighborhood as of December 31, 2012 shows positive notes in all of the categories followed below. When comparing the fourth quarter of 2012 to the same period during 2011, we find that the number of closed sales rose slightly and the median sale price increased significantly. The time on the market was less for these sales and the dollar per square foot increased over the past year. The list to sale ratio also rose from 2011.  Following are the actual comparisons for the various categories mentioned above as compared to those reported in 2011.

2012 4th Quarter Comparison20122011
Number of Sales98
Median Home Price$321,500$239,400
Average List to Sale Ratio98.9%91%
Median Dollar Per Square Foot$237$145
Days on the Market65177

Current Market Conditions – January 4, 2013

As of January 4, 2013, the Pioneer Trail neighborhood reports 2 homes on the market ranging from a minimum of $399,000 to $469,000.  The basic law of supply and demand is described in real estate terms as the “absorption rate.”  Absorption rate (or monthly supply of inventory) are a calculation based upon the rate of closed sales to active listings.  It is an accurate way to keep track of market trends.  A balanced market is when there is a six-month supply of homes indicating that there are enough inventories to supply the demand.  Less than six months is considered a seller’s market and greater than six months is a buyer’s market.  As of December 31, 2012 the Pioneer Trail neighborhood is reporting an average monthly supply of 2.6 as compared to 4.7 at the same time in 2011.

The above information is taken from statistics provided by the South Lake Tahoe Association of REALTORS® Multiple Listing Services and while deemed to be accurate, are not guaranteed.

Heavenly Neighborhood, So. Lake Tahoe- 2012 4th Quarter Real Estate Market Update

Heavenly

The South Lake Tahoe real estate report for the Heavenly neighborhood as of December 31, 2012 shows positive notes in most of the categories followed below. When comparing the fourth quarter of 2012 to the same period during 2011, we find that the number of closed sales is down, however, the median sale price is up. The time on the market was less for these sales and the dollar per square foot increased over the past year. The list to sale ratio slightly decreased from 2011.  Following are the actual comparisons for the various categories mentioned above as compared to those reported in 2011.

2012 4th Quarter Comparison20122011
Number of Sales711
Median Home Price$335,000$325,000
Average List to Sale Ratio93.3%95.6%
Median Dollar Per Square Foot$222$173
Days on the Market133164

Current Market Conditions – January 2, 2013

As of January 2, 2013, the Heavenly neighborhood reports 7 homes on the market ranging from a minimum of $279,000 to $1,899,000.  The basic law of supply and demand is described in real estate terms as the “absorption rate.”  Absorption rate (or monthly supply of inventory) are a calculation based upon the rate of closed sales to active listings.  It is an accurate way to keep track of market trends.  A balanced market is when there is a six-month supply of homes indicating that there are enough inventories to supply the demand.  Less than six months is considered a seller’s market and greater than six months is a buyer’s market.  As of December 31, 2012 the Heavenly neighborhood is reporting an average monthly supply of 6 as compared to 13.9 at the same time in 2011.

The above information is taken from statistics provided by the South Lake Tahoe Association of REALTORS® Multiple Listing Services and while deemed to be accurate, are not guaranteed.

« Previous PageNext Page »