Read more: http://www.wxyz.com/dpp/news/expert-says-decreasing-foreclosure-rates-in-michigan-is-a-bad-sign-for-our-economy#ixzz1UoRKwLRy

RealtyTrac is out with the total foreclosure numbers for 2010. On the whole things are getting worse.

72 percent of major metro areas saw an increase in foreclosure volume. Although some of the worst hit areas in Nevada, California and Florida improved from 2009, the foreclosure rate in these areas remains shockingly high. If not for some foreclosure suspensions due to the robosigning scandal, these numbers would have been higher.

For a frightening way to visualize the foreclosure crisis, we’re borrowing a Google maps technique described by Barry Ritholtz.

Click here for a satellite tour of the foreclosure crisis

Read more: http://www.businessinsider.com/satellite-tour-foreclosure-cities-2011-1?slop=1##ixzz1J3pAjvrB

Foreclosure activity jumps in Michigan. A new report ranks Michigan among the top five states that issued foreclosure filings in 2010. Foreclosure activity in Michigan increased by 15 percent comparing 2009 to 2010. That’s according to Realtytrac, an online database for foreclosure real estate.

Most common Questions

1. Is the Debt forgiven?
2. Will we have any tax consequences? 

Answers……

The answers to these questions are not so easy, thus the objective behind this particular post.

There are Misconceptions in Short Sales, Foreclosures, and Bankruptcy Tax or Deficiency Judgements
Everyone’s situation is Different! 

Consumers should seek advise from legal counsel and certified tax advisors long before they start implementing a plan to cancel or minimize the debt of a mortgage.  The last thing a home owner needs to do is to walk away from a home or jump through the process of a short sale without knowing up front the risk of tax consequences or a Deficiency Judgement.    Beware:  The opinions and interpretations from various professionals may differ

As a Licensed Associate Broker in both the State of Florida and Michigan, we advise our customers and clients to seek legal and tax advise throughout the entire home buying or selling process.  We are not qualified or licensed to offer or provide such information.  Again, every situation is unique. 

Cancellation of debt is not a simple issue.
Debt Cancellation – IRS Publication

I wrote this post after reading an article in a Realtor professional magazine about a recent article “Short Sales: Three Misconceptions”  There were statements made that were reviewed by various professionals and while the statements applied in most cases, it is not true in all cases.  

It is my objective to remind people that there are exceptions to most everything, we certainly can’t believe everything we hear or what is reported from any media source, and as a Realtor, I am qualified to Market your home and assist you with the process of buying and or selling a home.  All other questions related to tax and legal consequences related to the purchase or sale of a home need to be directed to qualified professionals.

Kay Pearson, CRS
Associate Broker
Keyes Company – Real Estate One
Florida and Michigan

Fannie Mae recently launced a new website to provide information and possible options to homeowners who are behind on their mortgage payments.  Knowyouroptions.com features practical information and resources to help homeowners avoid foreclosure by either staying in their home or selling it.  Resources include a list of local foreclosure prevention events, housing counselors, Fannie Mae resources, credit score information, forms, videos, and more.  There is also useful insight as to how to avoid foreclosure scams. 

Visit www.KnowYourOptions.com

1. Judicial vs. non-judicial foreclosures: Why does the distinction matter?

2. Is purchase of an owner’s title policy necessary for buyer protection? Why doesn’t regular title insurance protect the buyer in these cases?

3. Under what circumstance can a buyer of a foreclosed home lose that home if the foreclosure wasn’t processed correctly? Does the distinction between judicial and non-judicial foreclosure come into play here?

4. Foreclosure rules differ in each state, but are there general rules that apply in all cases?

5. What are the latest developments among banks and regulators on the foreclosure freezes?

Of all the existing-home sales reported by Realtors in the core Orlando market in May, 23 percent were short sales. They are called “short” sales because the sales price come up “short” of, or less than, the amount owed on the mortgage.

What these homeowners, whose loans are “underwater,” may not realize is that they could successfully complete a short sale of their house but then face a lawsuit from their lender for not paying off the entire loan, a shortfall known as a “deficiency.”

At particular risk of being hit with such a debt judgment are owners of second homes and investment properties, homeowners who haven’t faced any kind of financial hardship, and owners who have a second mortgage.

“That’s going to be a huge problem moving forward in the next few years,” said Orlando lawyer Matt Englett, who specializes in home foreclosures. “These people who use Realtors to advise them on the transactions can end up facing deficiencies, and the deficiency notes will go to third-party collections agencies, and they will start suing and progressively pursuing those people.”

Homeowners have several options if they wish to avoid getting calls and lawsuits from debt collectors.

In a mortgage document called the “payoff letter,” a lender may include a blanket provision stating that it reserves the right to sue the seller at any time for unpaid mortgage debt. At the very least, Englett said, sellers need to make sure they do not give lenders that right.

Some lenders, particularly smaller ones, have been willing to state just the opposite — that they will not pursue any mortgage debt from the seller, he added.

Simply asking the lenders to cooperate by removing any wording about collections isn’t enough, Englett said. The seller is usually faced with building a case that details errors and omissions made by the lender in its mortgage documents, to gain leverage and force the lender to forgive the debt.

A new option that emerged in June is a federal program that calls on banks to forgive some of the mortgage debt of certain, qualified short-sale sellers. To qualify, sellers must:

Meet the criteria of the federal government’s Home Affordable Modification Program.

Have the house as their primary residence.

Face a financial hardship, and their mortgage payment must be more than 31 percent of their gross income.

The new program makes short sales a good option for homeowners facing a financial hardship, though it’s not meant for homeowners who can afford their mortgage but want to walk away from an upside-down loan, said Frank Rubino, vice president of the Chase Homeownership Center in Orlando.

“It’s not right. It’s not moral. It’s not the right thing to do,” Rubino said. “Why should customers look to the bank to substantiate a loss for the house they bought? … If they bought the house and sold it for $100,000 more than they paid, they wouldn’t share those profits with the bank.”

The decision of whether to pursue a former homeowner for outstanding debt varies from mortgage servicer to mortgage servicer, Rubino said, and can hinge on such things as whether the customer mismanaged his or her finances, Rubino said.

Sellers with a second mortgage face particular challenges if they try to walk away from a short sale without any remaining debt.

Jennifer Davis, a real estate agent for Lifestyles Home Sales Inc. of St. Cloud, said she recently almost lost a sale because of outstanding debt the seller owed on the house. Fortunately, she said, the buyer wanted the house badly enough to cover the outstanding note.

Banks usually have four years in which to file a deficiency judgment, but they can sell it to a third-party collection agency — “and the collection firms can chase you down for 20 years,” Davis said.

In cases where the seller has a second mortgage or can’t qualify for the federal programs, Davis said, she usually directs them to a real estate lawyer and a tax adviser.

Copyright © 2010, The Orlando Sentinel, Fla., Mary Shanklin, Knight Ridder/Tribune Business News. Distributed by McClatchy-Tribune Information Services.