06.19.12 Tuesday Talk "The American Dream of owning a home will be a subject of the Pass Century"

by qinfovio 3. July 2012 16:38
Good afternoon,


As today's, inventory is running very low. I think that most first time home buyers are getting  too

picky and the ones that are taking advantage of this situation are investors. We have the lowest interest rate

in the history and less than 4.00% will not exist; unless it is an interest loan only.


Most of these loan made in today's market are FHA loan that have been bought back from our government through bonds.

It is not going to be for ever before our government dry out. The next generation of loan will then be made by Banks, Lenders

with higher qualification requirement, larger down payment, higher rate just like it used to be.


The American Dream of owning a home will be a subject of the Pass Century. As I expect the home price to keep declining at a lower rate,

mostly at the higher end, most peoples would be unable to buy since they won't have the money for their down payment.


As you can see with all our short sales, and foreclosures, most of these loan holders were investors. They are the one that bought of these

bad loans. And believe me that before these investors invest again on buying loan, they will be requiring larger down payment with more restriction.


As today, I am seeing faster change in the entire short sales industry with Tax Relief ending this year. I am seeing our government getting more difficult

and giving more opportunity to home owners to stay in their homes and lenders offering deed in lieu to homeowner.

Lenders will be better off to rent these property and bundle a bunch of them to sell them to investor, like Warren Buffet.  He mentioned not long time

ago that he would love to get into this market. Unlike most investors, Warren does not invest into gold, there is no dividend or income from it, it will just goes up

with inflation. Instead, he will look at compounding dividend and in this case the return on bundle's property will be easily around 15% with the volume that

he can buy. These property would be pay off in 6 to 7 years.



Last week we had a good meeting with one of my client with Philip Daunt a Real Estate Attorney that will take over our short sale.


The most important issue was to find out if our homeowner has refinance or not their loans and if they refinance their loans, what was the money used

for? If it was use to do a remodeling, then you will be exempt from your tax but you will need to show all receipts. If the refinance was used to consolidate

debts and spent for any leisure, there is a big chance that you will have some tax consequences.


As the first loan go away with a short sale or a foreclosure, the first loan is called a non recourse loan meaning that the lenders cannot come

back after the owner to sue for money repayment, but you still have this tax liability to check. You have to check with your Tax Attorney.


Now if the second loan was refinance or if you took a line of credit, it will turn this loan into a recourse loan and the bank/ lenders will have the right

to collect that money and you will be also liable to paid tax on it. The only option left will be to file bankruptcy. You will have to check with

a Bankruptcy Attorney. 


Bottom line, short sales will have tax liabilities if not qualify with the tax relief act of 2007 and if it is a non recourse loan, the second will sell to debt collectors.


Thanks and I will see you next week


Christian Viollaz
License 01318338
To Find Out What's Your Home Worth?


Comments (1) -

Sarina Valentina
Sarina Valentina United States
3/31/2014 12:41:50 PM #

Have any arguments about me adding this on my twitter?

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