Short Sales | Heise & Heise, LLP

What Happens to the Loan Shortage in a Short Sale?

December 3, 2020 by heiseheisellp Leave a Comment

What Happens to the Loan Shortage in a Short Sale?

Are you losing sleep trying to keep up with your mortgage payments? Are you considering a short sale in Baltimore? Many of our current and former clients delayed in contacting us for assistance because they were concerned that the deficiency (the difference between the loan amount and sale price) was too large for their lender to approve. In my 10+ years of handling short sales in the Baltimore metro area, the most frequently asked question from new short sale clients during our intake interview is, “will the lender take this big of a loss?” In most cases the answer is yes. Not only will they approve a large loss, they typically waive the right to collect the loan shortage.

We have negotiated sales of homes where the deficiency has been as low as $4,000.00 and as large as $415,000.00. We discovered on most occasions a loss is a loss to the lender irrespective of how small or large the amount. However, the IRS generally treats any discharged debt as taxable income and it is included in your gross income which could lead to a tax liability. The Consolidated Appropriations Act of 2020 allows some borrowers to exclude up to one million dollars ($1,000,000.00), up to two million dollars ($2,000,000.00) for married couples, of forgiven debt from their taxable income for short sales of principal residences. While this provision is set to expire in 2020 it will apply to contracts entered into in 2020 that settle in 2021 so it is best to act quickly.

If you’re thinking about a short sale in the Baltimore area don’t delay any further, call our real estate law firm at 410-276-1983 to discuss the details of your situation.

From FSBO to Short Sale in Baltimore County

June 18, 2020 by heiseheisellp Leave a Comment

baltimore fsbo to short sale client We recently handled a matter where a landlord passed away and the tenant was interested in purchasing the Baltimore County property from the personal representative of the landlord’s estate. We were engaged to prepare the contract for the tenant as a for sale by owner transaction. After the tenant’s lender received the appraisal it became clear the contract sales price was $30,000.00 higher than the value of the property. The problem here is that the sales price was dictated by the funds that were necessary to satisfy the landlord’s existing mortgage. What do we do here to salvage the transaction and get the buyer in the home?

Fortunately, the principal real estate attorney at Baltimore-based Heise & Heise, LLP is also an associate real estate broker with Douglas Realty. We were able to list the property for sale as a short sale, market it, and ultimately write a contract for the tenant. Through the firm, we handled the short sale for the landlord’s personal representative, negotiated a sales price that was $30,000.00 less than the original sales price and obtained a $5,400.00 credit for the tenant.

The landlord’s personal representative was able to benefit from a full waiver of deficiency and release of lien. For added convenience, we also introduced the tenant to a local Baltimore-based title company offering some of the best rates around and has a great deal of experience handling Baltimore short sale transactions.

All of the parties appreciated the convenience of such a streamlined process with all services offered through one central office. If you are experiencing a similar situation please call our team of Baltimore real estate attorney’s at (410) 394-9504 us so we can discuss how we can help and the services we provide.

How the CARES Act Can Help Baltimore Homeowners

June 8, 2020 by heiseheisellp Leave a Comment

CARES Act short sale home in Maryland We recently brought on a few short sale clients in the Baltimore, MD area who purchased properties just before the Great Recession of 2007-2009. These clients saw the value of their properties drop drastically once the recession hit and did not seen the values recover. Some owners continued to occupy the properties as their principal residence while others rented out the properties and were left paying any shortgage out of pocket and suffering losses month-after-month.

The current housing climate caused by the Covid pandemic presents a unique opportunity for these property owners to divest themselves of a huge liability, while minimizing the consequences to their credit score. How so? The Coronavirus Aid, Relief, and Economic Security (CARES) Act requires the lenders to report to the credit bureaus that the borrowers are current on their loan or account if the homeowners are:

current on their mortgage;
enter into a forebearance or other accomodation with their lender (allowing them to suspend payments)
and are meeting the terms of the agreement

How would this look? Let’s run out a scenario for context. A property owner has a former principal residence that is underwater by $100,000.00. S/he purchased another home and is renting out the former residence. The rent coming in does not cover the full mortgage payment and the owner is paying $500.00 monthly to cover the shortage. S/he could enter into a forebearance agreement with the lender, negotiate a 4-6 month suspension of payments, list the property as a short sale and have the property sold before the forebearance period expires. The lender would be required to report that the loan is current during the marketing period while no payments are being made.

Additionally, where a loan is already in default some lenders are willing to suspend negative credit reporting. How this is handled varies from lender to lender, but the key it to contact the lender and work out an arrangement.

If you have a client nurturing along a property with negative equity and is current on their mortgage, or is in default, now is the time to reach out and encourage them to enter into a forebearance or other agreement, list the property as a short sale, skip 4-6 months of payments, sell the property and not take a hit to their credit score for the skipped payments.

Please call the experienced team of Baltimore, MD real estate lawyers at Heise & Heise at (410) 394-9504 for more details on how we might be able to assist you.

Tax Relief for Short Sales in Baltimore

March 8, 2018 by heiseheisellp Leave a Comment

Depending on how closely you follow what is going on in Washington, you may or may not be aware that Congress recently passed the Bipartisan Budget Act of 2018. Even among those of you with your finger on the political pulse, it can be easy to overlook some smaller items rolled up in these types of complex Congressional deals. Among the many provisions included in this bill, the one we want to draw your attention to involves real estate short sales in Baltimore, MD and nationwide.

If you short sold your principal residence in 2017, and the lender forgave the debt, you will not need to include the forgiven debt in your gross income. Additionally, if you entered into a contract in 2017 to sell your principal residence and it does not end up settling until 2018, you will be able to benefit from this provision. Find additional details on the IRS website: http://bit.ly/2HSefC8

This is huge news and will provide tax savings for many hard working people!

Have questions about how this new short sale tax law might impact you? Contact us today for a free consult.

Are Short Sales Slowing Down in Baltimore?

December 14, 2017 by heiseheisellp Leave a Comment

short sales slowing down in baltimore, md Heise & Heise, LLP is a Baltimore-based law firm that has been assisting property owners in Maryland and the District of Columbia with short sales since 2010. Over the past twelve months, we have noticed a slowing in the number of short sale inquiries and short sale clients at our office. The biggest driver of the reduced number of inquiries and engagements is the improving local real estate market and the strong appreciation in home values. These two factors have made a short sale less of a necessity for many people. We can candidly say that we have never been happier to have less business as this means that many people are enjoying a healthier financial condition.

However, short sales will continue to have a roll in some peoples’ lives for the foreseeable future for a variety of reasons.

Reasons for a Short Sale in Baltimore

loss of employment
job relocation
change of marital status
death in the family
unexpected health issues

Unfortunately, those individuals experiencing one of the hardships above do not have the luxury of waiting for continued appreciation to erase any prior reduction in value their home. If you are experiencing any of the hardships above and are considering letting your property go in foreclosure or declaring bankruptcy, please call us at (410) 394-9504 or contact our firm before doing so for a free consultation.