Friday, October 15, 2010

Short Sale: How Debt Forgiveness Works

With a short sale, the lender has three possible ways to handle the deficiency balance, which is the portion of the mortgage debt not covered by the sale of the home. First, the lender can attempt to collect the deficiency balance from the seller after the property has closed. Second, the lender may require the seller to sign an unsecured promissory note for the deficiency balance as a condition of agreeing to the short sale. If the new note is for less than the balance of the original debt, the difference would be considered canceled, or forgiven, debt. Third, the lender may agree to cancel the entire deficiency balance.

On the surface, option three would be seem to be the best alternative for a seller. However, the IRS considers any canceled mortgage debt ordinary income. This means that the amount forgiven is taxed at the same rate - somewhere between 15% and 30% - as the sellers' salaries. In addition, because the IRS requires the lender to file a 1099-C form stating the amount of the canceled debt, Uncle Sam will have a record of the exact amount of the debt that was cancelled. A seller will also receive a copy of the 1099-C to use in filing income taxes.

4 Exceptions to the Rule

The IRS does recognize four situations in which cancellation of debt will not result in tax liability for the seller. A seller may avoid tax liability:

When the borrower receives a bankruptcy discharge and the deficiency was included in the bankruptcy.

When the borrower is insolvent at the time of the cancellation of the debt. Insolvency would occur when a borrower's liabilities exceed assets. Note that seller would have to prove this insolvency to the IRS when filing a tax return.

When the debt was secured by a nonrecourse loan. Under a nonrecourse loan, the lender does not have the legal right to collect a deficiency judgment from any assets of the debtor not pledged to secure the loan. While most home mortgages are do not fall into this category, purchase money loans on a person's residence are nonrecourse in some states.

When the tax liability from the cancellation of debt on an investment property can be offset against other business liabilities and expenses. This exception does not apply to properties occupied as a residence by the mortgagor.

In many short sales, a seller would be able to qualify under the first two of these exemptions, especially since it was almost certainly necessary to show financial hardship in order to convince the lender to agree to a short sale. However, it is the seller's responsibility to notify the IRS why the amount in the 1099-C should not be counted as ordinary income. Otherwise, the IRS will consider the forgiven debt as income and penalize the seller for unpaid taxes.

If you live in Charlotte, NC or surround area and need additional info on short sale call real estate short sale specialists Yuriy Vaynshteyn @ 704-405-0634 or visit our web site

How to avoid foreclosure through short sale or loan modification

Increasing numbers of homeowners are facing a tough choice in this difficult economic times. Foreclosures are becoming more and more common even among families that could not even think about it just recently.

There are many home owners that don't know there are other options other than foreclosure. Some are even too busy or embarrassed to investigate their options and look for an alternative.

I will try to explain some of the things that a homeowner can do to avoid a foreclosure -- such as a short sale or a loan modification. Both short sale and loan modification would help in avoiding a foreclosure but each option has a different ramification and outcome.

The short sale is for those that absolutely need to move and wipe out their debt altogether. A loan modification is for those that would really like to remain in their homes but cannot do so without lowering their payment either temporarily or permanently.

It is important to remember that banks are not in the business of owning Real Estate - they are in business of lending money - and would much rather assist a homeowner than to take ownership of their home.

Short Sale Option.

A short sale is a legal lender approved solution designed to assist those home owners who are financially strapped to get out from under their mortgage debt.
A short sale is negotiated through the mortgage holder of an owner’s home whereby the mortgage holder agrees to take less than what home owner owes on the property. The home owner benefits in this situation because they get out of their financial problems without going to foreclosure which can seriously damage their credit. Most lenders will work with a short sale option to avoid a costly foreclosure.

You might ask why? There are a number of reasons why banks would want to negotiate a short sale. The easy answer is that in most cases a bank will lose significantly less if they agree to a short sale. The banks will save on attorney fees and will clean their books - at the same time.

Loan Modification Option.

What you need to understand is that just because you missed a few mortgage payments does not mean that a bank is not going to want to work with you! There are times in people lives where they can come under financial stress.

Banks understand that sometimes a person’s problems are not permanent and can turn around. You have all the incentive to try to avoid the foreclosure process at all costs and the bank might be interested in doing so as well.

With a foreclosure on your record you will not be able to buy a property with conventional loan financing for five years. So if you or someone you know is potentially facing a foreclosure because of falling behind in mortgage payments don't just sit back and let it happen. Reach out to your lender and explain your situation right away and ask for their help.

The 1st thing a lender or bank will want to know is exactly where you stand financially at the moment and what you can afford. Let the mortgage company or bank know your exact situation. Speak to them about your desire to remain in the home and how you can work out a payment plan that will be mutually beneficial.

The bank is going to want to know what has caused you to become financially strapped. You can plan on being asked to put this in writing. This is known as a "hardship letter". In the letter you will be asked to explain the circumstances behind your missed payments and show an understanding of why you believe you will be able to continue to make payments under the modified terms.

The bank has the option to try to keep you in the home in a number of ways including an extension of the length of the mortgage, the interest rate or principal reduction. It could also be a combination of all three.


I have been able to help many homeowners to negotiate a short sale and modification working with many lenders such as Countrywide, GMAC, National City, Washington Mutual and others. If you decide to go short sale or load modification route, it is important to find a Realtor who has experience doing short sale and loan mods. This process can be lengthy and require significant investment in time and resources. For many home owners it is well worth it!

Please call me at 704-293-3600 or e-mail for help.

Sunday, June 8, 2008

Charlotte Uptown, projects under construction in Fourth Ward

500 West Trade Located at West Trade Street at North Graham Street and adjacent to the Gateway Multimodal Station and Johnson & Wales University, this project will include 600 residential units, retail space and a 980-space parking garage. Construction is set to begin this
year on the 27-floor building and should be completed by 2010.

701 North Church Completed in July 2007, this nine-unit residential project is at West 10th Street at North Church Street. Only a few units are for sale in the $500,000's - $600,000's price range.

Avenue Completed in November 2007, this 386-unit, 36-floor high-rise is at West Sixth St. at North Church St. Condos range from the mid-$200,000s to more than $500,000 and are 668
to 1,271 square feet. Retail space is also available. Currently aproximately 92% units are sold.

Citadin This yet-to-begin project is at West Eighth Street at North Graham Street. In January, the city approved 550 units and 30,000 square feet of commercial space for the mixed-use development. Plans are for an eight story building with condos from 570 to more than 3,000
square feet that range from the $170,000s to more than $1 million.

Garrison at Graham Construction began in summer 2007 and should be completed by spring 2009 on this 11-story, 41-unit property. Currently, the remaining 20 units are listed between $425,500 and the mid-$800,000s.

Uptown Village Located at Hamilton Street and Seaboard Street, this new entertainment and
retail center will consist of the North Carolina Music Factory and a residential area. Plans are to restore some of the historic buildings for housing, galleries, nightclubs and restaurants. Deco One will be a six-story, 139-unit building for residents. In total, more than 1,000 condominiums are planned. Pre-sale units are expected to run $195,000 to more than $600,000 for 558 to 1,835 square feet. The project is slated for completion in 2010, but currently units are not yet for sale.

The VUE Charlotte This 51-floor, 410-unit condominium high-rise will be at West Fifth Street and Pine Street. Units are 570 to 3,000 square feet and range from the low-$300,000s to more than $2 million. On February 6, the VUE received underground-easement approval and was scheduled to proceed with clearing and construction. The project is due for completion in 2010, and as of press time, the units were more than 60 percent sold.

Monday, May 19, 2008

Charlotte is the best place to live in America according to

I feel that all of us in the real estate business have been drenched by fear that the negative media spreads like wildfire. I want to point out that there is positive news that isn't getting as much press.

For example, take worker productivity in the U.S. It jumped by 2.2 percent in the latest quarter - and that was on top of a 1.8 percent gain the quarter before. Why is that significant for real estate? Because rising productivity generally points to lower inflation, and lower inflation fears help keep interest rates low helping buyers!

In addition, Charlotte, N.C., leads's annual ranking of the top 100 cities. Apparently, there's just something about North Carolina. For the second year in a row, America's best city in which to live lies within its borders, according to's" annual list.

This year, Charlotte, NC is in the top spot, the site announced late last week. Last year's winner was Asheville, which slipped to No. 7 on this year's list.

"North Carolina is very active on our radar," said Steve Nickerson, president and CEO of HomeRoute. "It continues to get a flood of interest from all over."

HomeRoute is the real-estate firm that operates, a source of community information and real-estate resources for people who are relocating. Each year, the site ranks the top 100 places to live in the country.

Areas need to be nominated on the site in order to be eligible for the list; more than 2,000 were nominated this year, Nickerson said.

Thinking about relocating to Charlotte? Facing a job transfer, a quality of life move, or just want to come for a nice weather - visit us at or or, call us directly (704)405-0634 or email us.

Wednesday, April 9, 2008

Jewish community prepares for growth in Charlotte

Over the past 10 years, the Jewish population of the Charlotte region has grown by at least a one-third to an estimated 10,000 to 12,000 individuals.

To help agencies serving the Jewish community cope with that growth, three key organizations have stepped up their fund raising.

The Foundation of Shalom Park has just completed an eight-year campaign that raised $40 million to nearly triple the facility space on its 54-acre campus.

Butch Rosen, executive director of the Foundation of Shalom Park, says facilities on the campus have grown to 225,000 square feet from 85,000 over the past six years. The campus has two synagogues and their religious schools; a day school, pre-school and high school; community center; library and resource center; athletics facilities and meeting space; and other Jewish agencies.

And Foundation for the Charlotte Jewish Community, a supporting organization of Foundation for the Carolinas that has 84 funds totaling nearly $39 million, has launched an effort to spur Jewish donors to create endowments and planned gifts.

Phil Warshauer, director for planned giving at the Foundation for the Charlotte Jewish Community, provides planned-giving advice to the nine agencies on the organization's board and represents them to prospective donors.

The foundation also has formed a "legacy" group to recognize donors who have made deferred gifts.

In the wake of an annual drive that raised a record $3.03 million this year, the Jewish Federation of Greater Charlotte is allocating more dollars to Jewish agencies in the region and abroad.

Sue Worrel, executive director of the Jewish Federation of Greater Charlotte, says this year's campaign aims to broaden and expand the organization's donor base. This year, the federation is distributing 70% of its funds to roughly 20 local agencies, with the rest going to groups overseas. Developing leaders within the Jewish community and serving as a voice on Jewish issues are the focus of two of its initiatives.

For example, the Bernstein Leadership Group, formed 10 years ago, offers an 18-month program to cultivate emerging leaders for the Jewish community. And in August, the federation launched its Community Relations Council to represent the Jewish community and develop relationships with the news media, government, nonprofits, interfaith community, schools and academia.

Agencies serving the local Jewish community include:

Need additional info on Jewish Agencies in Charlotte, NC and surrounding areas call real estate RELOCATION specialists Yuriy & Luda Vaynshteyn @ 704-543-4590 or visit our web site or

Sunday, March 30, 2008

Charlotte alone in housing-price gains

Charlotte was the sole U.S. metropolitan area to record a gain in housing prices in January among the 20 markets tracked by Standard & Poor's and Case-Shiller.

The year-over-year price of existing single-family homes grew 1.8 percent in the Queen City in January, according to the S&P/Case-Shiller Home Price Index.

Nationally, January prices declined 10.7 percent from a year earlier.

Statewide, existing-home sales fell nearly 18 percent to 7,421 closing last month. That was down from 9,004 in the year-ago period.

The average price statewide dipped more than 3 percent last month to $206,964.

Sunday, March 23, 2008

Real Estate in Charlotte, NC and surrounding areas

Charlotte's real estate market differs from the rest of the country. I will publish my thoughts on residential and commercial sales and property rental and management issues in this blog. Please visit our web site to search for properties (homes, condo, townhomes, rentals and land) in Charlotte, Lake Wylie and Lake Norman and surrounding areas and feel free ask your questions on real estate issues in this blog.