Role Of The Hardship Letter In A Short Sale

What happened? Seriously what happened? When you took the loan out everything was great. You were making money, your credit was good and by all accounts you appeared financially sound.


Now you’re in default and telling your lender you need to sell the property short to avoid the home being repossessed by foreclosure? Ok, then tell us what happened.


We hear this all of the time and we tell the homeowners this is exactly what the bank is thinking and this is what they will have to explain. So just how do you explain it…you write a very compelling hardship letter.


Bad things sometimes happen to good people. It is highly doubtful that the homeowner intended to default on his / her mortgage and end up in foreclosure.


Most likely their enjoyment of the American Dream of homeownership was interrupted by some tragic event.


Maybe the loss of a job, a bitter divorce, or the unfortunate untimely illness or death of a family member caused the homeowner borrower to default on his mortgage.


Whatever the catalyst, the lender wants to hear from the borrower just what happened to cause them to be in the financial situation they are in.

If the bank is going to consider taking a short sale, they need to be convinced that something drastic has happened to the borrower that will make it impossible for the borrower to recover and that it is in the bank’s best interest to accept a short sale on the defaulted mortgage.

Top 10 Home Buying Mistakes

1. Doing it alone. Buying a house is a complex transaction. Even if you don’t use an agent, you’ll need a complete, dependable team: lender, lawyer, inspector, insurer, as well as referrals and advice from friends and family. Enlist the help of these individuals early in the buying process.



2. Buying at first sight. You may be in love with the place, but does it fit your family’s needs and budget? Make a list of your needs and wants and make sure the house fits your requirements. Check out the neighborhood and the community before you buy by visiting at different times of the day and week to learn about noise and traffic patterns. Even if you don’t have kids, check out the local schools to make sure your resale value will be good.



3. Not getting pre-qualified and pre-approved. Being pre-qualified gives you a general idea of how much you can afford to borrow. Being pre-approved means a lender has verified your information and credit rating and agreed to provide you with a specific amount of money. You are in a better position to go house hunting knowing exactly how much you can afford and that you have financing.



4. Overbuying. You may qualify to borrow more, but can you afford to? Analyze your monthly costs: debt, food, transportation, entertainment, and savings. As a general rule, your total monthly debts, including your mortgage, should not exceed 36 percent of your income before taxes. Be sure to budget enough to cover closing costs (often two to five percent of the home’s purchase price), plus moving, redecorating and maintenance. Allow for increases in ongoing expenses such as utilities and taxes.



5. Misplacing your trust. No matter how much you like the agent, sellers, inspector, or the guy down the block who vouches for them, remember this is a business transaction. Your decision is binding. Do your own research and know your support team’s roles and responsibilities.



6. Relying on oral agreements. Get it right and get it in writing. Written agreements almost always trump oral ones when it comes to contracts. If the offer says the lawnmower is negotiable, but the agent says it’s included, get it in writing.



7. Skipping the fine print. You need to understand what you’re signing before you pick up a pen. Ask for documents in advance, make time to read them and ask questions. Get copies of your mortgage papers a few days ahead of closing.



8. Forgetting or betting on resale. Avoid buying a home that costs 50 percent more than neighboring homes and think before buying the most expensive home on the block. Your neighbors’ lower home values will weaken yours. Remember, markets change. If you buy intending to flip your investment and the market falls and you have to sell, your selling price may not be enough to even cover your mortgage.



9. Making an unconditional offer. Protect yourself with at least two of these contingencies in your offer:

* Mortgage financing -- You’re pre-approved, but is the house? Before a bank will lend you money, it will want a formal appraisal of the property to confirm that there is sufficient equity in it to warrant the loan. If the house appraises lower than the sales price, the loan may be declined.
* Inspection -- never buy an existing or new home without a thorough home inspection. Walk through the home with the inspector to learn more about the house and any concerns he or she may have.
* Insurance -- confirm you can get adequate coverage. In some areas, it’s difficult to get hazard insurance.



10. Having buyer’s remorse. No place is perfect. There will always be surprises. Don’t let a few initial blips spoil the whole ride. And don’t miss a great house waiting for the perfect one!

Quiz School - Try this quiz and get your own certificate

Rose Realty Joins Realty USA

Rose Realty has entered into an agreement to merge its Sidney Real Estate Firm with RealtyUSA’s Otsego/Delaware region. Rose Realty in Sidney NY has served the region proudly for over twelve years. Owners Steven and Jacqlene Rose and their team will join RealtyUSA’s Sidney Office at 39 Main Street.

Steven Rose states, "It is with sincerest gratitude that we recognize, appreciate and thank the customers and clients that have made our office so successful over the last 12 years. This new partnership will make it possible for us to offer much more services and products to them and to continue the relationships that we have built and will continue to build for many years to come. We are pleased to partner up with such a professional and successful organization."

Merle Whitehead, Broker/Owner of RealtyUSA, said “I am excited to add such a great team to our current Otsego/Delaware family. This is a great fit that will help us continue to serve the Southern Tier market with distinction.”

RealtyUSA is the largest, independent real estate company in New York State with over 55 offices and nearly 2,500 agents and employees. RealtyUSA is ranked #5 in the United States in terms of the largest independent real estate firms.

• Merle L. Whitehead, CRB


• President / CEO


• RealtyUSA.com, Inc.


• 6505 East Quaker Street


• Orchard Park, NY 14127


• (716) 662-2000


• (716) 662-3385

France’s Carrefour Negotiating with Indian Cos for its Indian Retail Venture

French retailer Carrefour (CARR.PA) is in talks with Indian companies for a partnership and expects to start its business in India with cash-and-carry activities, the company told Reuters. The world’s second largest retailer, however, declined to give names of the companies it is negotiating with and also did not confirm whether it was in talks with Future Group, which runs Pantaloon Retail (PART.BO), India’s largest listed retailer.


“Carrefour and some Indian companies have been discussing partnerships but we do not want to comment on any of the company we have been talking to,” Carrefour said in a emailed statement to Reuters. Indian media has speculated on a tie-up between Pantaloon and Carrefour to launch franchise stores in India. Earlier this week, Future Group Chief Executive Kishore Biyani told Reuters that his company was in talks with several overseas retailers but declined to specify whether Carrefour was one of them.


Indian regulations do not allow foreign direct investment by multi-brand retailers although they can come in through franchise agreements with local players. Foreign retailers are allowed to invest up to 51 percent in single-brand retail and 100 percent in cash-and-carry ventures. India’s robust economic growth at more than 7 percent and its burgeoning middle-class with greater spending power are magnets for foreign retailers who are facing declining demand in their home markets.


The Indian retail market is estimated to be worth about $450 billion, of which organized retail with a share of 6 percent is growing at more than 20 percent. The restrictions on foreign investments in retail have left overseas players with no choice but to enter the Indian market with domestic partners, or set up cash and carry ventures. “Carrefour will develop its activities in India with the start of cash & carry activities in 2010,” the company said. The French firm has set up two entities in India - Carrefour WC&C India Pvt Ltd to carry on cash and carry business and Carrefour Master Franchise Company Pvt Ltd for its retail business.


Carrefour, which has been scouting the Indian market for nearly seven years, has been meeting local vendors and suppliers to finalize sourcing arrangements for food and non-food items. The company already sources supplies worth about $2 billion from India, according to industry estimates. Wal-Mart which has a joint venture with Bharti Enterprises has set up its cash-and-carry store in north India while Germany’s Metro AG (MEOG.DE) operates around five cash-and-carry stores in the country.

Foreclosures Keep Rising Despite Prevention Efforts

Foreclosure prevention efforts and moratoria that were in place in January and most of February do not seem to be effective in reducing foreclosures across the nation, especially in Sunbelt areas.

According to Realty Trac, the number of houses under foreclosure process has risen by 30 percent in February as compared to what it was a year ago. It has also increased 6 percent from January 2009.

A total of 290,631 properties were facing foreclosure nationwide, the report said. The states with highest foreclosure rates included Nevada, California and Arizona. Closed on the heels were Florida, Michigan, Idaho, Georgia, Illinois, Oregon and Ohio.

The states where the highest number of homes were under the process of foreclosure included California, Arizona and Florida. They were followed by Nevada, Michigan, Illinois, Ohio, Georgia, Texas and Virginia.

Impact of Budget 2010 on Real Estate Sector in India

The Budget 2010 presents a mixed bag for real estate sector in India.

With the recession fading out gradually and fund raising showing gradual and steady increase once again, the Indian real estate sector was clearly looking at 2010 as a year to build on its 2008 run. While concerns over liquidity and demand constraints have eased, developers were looking to execute the planned projects to maintain cash flows rather than raise more debt. The industry was therefore looking at Budget 2010 for “boosters” like tax breaks for townships / affordable housing sector, allaying the ambiguities on the real estate mutual funds to heal the bruises that the sector suffered in 2009. While the “infrastructure” status still alludes the real estate sector, a clear lean towards low-cost real estate especially housing was seen. It would be interesting to look at both sides of the coin flipped up by the Budget 2010.

The Positives

The pending housing projects have been granted a one year extension for completion, from the existing four years to five years, for claiming a 100% deduction on their profits under section 80-IB of the Income Tax Act, 1961 (“Act”). This extension is available for housing projects approved by a local authority on or after April 1, 2005.


In addition, under section 80-IB of the Act the built-up area of shops and other commercial establishments in housing projects has been relaxed to 3% of the aggregate built-up area of the housing project or 5000 square feet, whichever is less, from the existing 5% of the aggregate built-up area or 2000 square feet, whichever was less.


A 4 month extension has been provided for setting up and commencing operations of hotels and convention centers in National Capital Territory of Delhi and specified surrounding regions. Such hotels and convention centers would now be eligible to claim specified deductions, where such facilities are set up and commence business by July 31, 2010.


Investment linked incentives have been proposed for the business of building and operating new hotels of two-star or above category, anywhere in India, which start functioning after April 1, 2010. The incentives are in the nature of 100% deduction with respect to capital expenditure, incurred wholly and exclusively, for the purposes of such business, provided such expenditure is incurred prior to commencement of operations and the amount is capitalized in the books of such undertaking.


One per cent interest subvention on housing loans up to Rs.10 lakh (where the cost of the house does not exceed Rs.20 lakh) has been extended till March 31, 2011.


There has been higher allocation under Indira Awas Yojana and other rural development/infrastructure schemes.

What it means:

The extension of time period for completion of existing projects will give the industry players the comfort of time and help developers whose projects were held up during the slowdown of last year.
The relaxations regarding commercial establishments in the housing projects would enable basic facilities for the residents and help developers and real estate companies to make their projects more viable. Whilst the demand for “infrastructure” status to hotels has not been acceded to, inclusion of hotels for eligible deduction, through an investment linked incentive and not a profit linked one (as demanded by the industry players) does sweeten the deal and is likely to stimulate investments in this sector.
The interest subvention along with increase in the tax slab rates for individuals should provide the necessary demand boost for low-cost housing. It may also encourage the developers to build more houses in this segment to benefit from this demand pick-up.

And The Negatives

Budget 2010 in spite of positives like incentives to hotel business, housing projects, higher allocation under Indira Awas Yojana and other rural development/infrastructure schemes, is unlikely to meet the expectations of the industry primarily due to some of the service tax proposals such as.


Service tax on commercial rentals: The High Court of Delhi in the case of Home Retail Solution and Ors. v. Union of India had clarified that renting of commercial property would not be subject to the levy of service tax. The Budget has amended the scope of ‘Renting of Immovable Property Service’ to directly overrule the High Court judgment and to explicitly cover the activity of mere renting as well and this has been done with retrospective effect from 1st June 2007.
Moreover, renting of vacant land where the agreement of contract between lessor and lessee provided for undertaking construction of building/structure on such land for furtherance of business or commerce during the lease period will also be subjected to service tax.


Construction of real estate complexes will now attract service tax, unless the entire consideration for the property is paid after the completion of construction, that is, on obtaining the occupation certificate from the concerned authorities.


Service tax will now also be levied on additional services provided by a builder to buyers for extra charge like preferential location, internal and external development of complexes.


Increase in the standard rate of excise duties to 10% and also on cement, which is a major input for real estate construction.


What it means: Service tax on the activity of construction would primarily mean, buyers paying higher price for property which is under construction.


The expansion of scope of ‘Renting of Immovable Property Service’ is likely to be one of the most controversial proposals. Pursuant to the Delhi High Court judgment, most industry players refrained from paying service tax pursuant to such transactions. This amendment would have a significant impact on both the real estate sector as also sectors which rely on lease of immovable property for running their business. Further, retrospective nature of the amendment will now result in an adverse impact on the sector and may lead rise to a large amount of litigation.


In an industry where agreement of contract between lessor and lessee providing for construction of building/structure on vacant lands are a common phenomenon, an imposition of service tax on such transactions is not likely to go down too well with the real estate sector.


The increase in the standard rate of excise duty and increase in duty of cement and petroleum products will increase the cost of construction and it is expected that per unit cost for prospective buyers will also increase. But, the industry may also have to bear the pinch of such increase in excise duties, as at present, when the demand is on a slow recovery path, it may not be able to pass on the entire increase in the cost of construction to the buyers.

Conclusion

From demand boosters and other reliefs, to far-ranging service taxes and higher excise duties, the Budget 2010 presents a mixed bag for real estate sector in India. However, it has failed to address some of the key demands of the real estate developers, including infrastructure status to the real estate sector, relaxation of external commercial borrowings to fund projects, provision of separate deduction of Rs. 1 lakh for housing loan repayment or increasing the overall 80C deduction to Rs. 2 lakhs et al.
Though the positives mentioned above will indeed ease the burden imposed by widening the service tax net and rise in excise duties, it is difficult to be clairvoyant on the impact of the policy announcements at this time. However, it seems the service tax implications, especially from renting of property that are now required to be reckoned from 2007 are likely to be the dampeners in the growth driven and growth stimulated Budget 2010.