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Home Defaults Soar 33%
A new wave of foreclosures hit in August, as banks picked up the pace in taking action against home owners who have fallen behind on their mortgage payments, RealtyTrac Inc. reported Thursday.
The number of U.S. homes that receiving an initial default notice rose 33 percent in August from July. That increase represents the biggest monthly gain in four years, according to RealtyTrac.
“This is really the first time we’ve seen a significant increase in the number of new foreclosure actions,” says Rick Sharga, a senior vice president at RealtyTrac. “It’s still possible this is a blip, but I think it’s much more likely we’re seeing the beginning of a trend here.” (…)
Owners Who Refinanced May Owe IRS
People who cashed out refinances, or had part of their mortgage debt forgiven when they sold their homes through short sales, will probably owe the IRS a big payback. In 2007, Congress passed the Mortgage Forgiveness Debt Act, but that doesn’t let everyone off the hook. Here are exceptions to the rule:
• Anyone who did a cash-out refinance and spent the money on something not housing related, then got in trouble and lost their home to a foreclosure or short sale, will owe the IRS as if the money from the refinance were earned income.
• The IRS will forgive tax liability only on money from home-equity loans that was spent to improve the property.
• Anyone who lost a vacation home or investment property to foreclosure or short sale will owe Uncle Sam.
• Multi-million dollar homes — lost or sold — are always subject to tax.
O.C. Home Sales Up 33%
Sales of homes in Orange County surged last month by 33% while inventory declined by 9%. Demand has been surprisingly strong over the past four weeks. New pending sales increased in Orange County to 3,553 homes, an increase of 306 over the previous month. This is the highest number of pending sales since August of 2005. The average expected time for a home to be on the market today is 4.35 months (number of active listings divided by the number of pending sales).
Comparing the current environment to last year, there was a total of 2,374 pending sales at this time last year, or 1,179 less than today. This is an increase of 50% year-over-year. Two years ago, demand was at 1,628 homes, or 85% less than today and three years ago demand was 21% less for a total of 2,942. (…)