This Week’s Real Estate Short Stories

Late Year 2012 Luxury Home Sales Spike

Sellers wanting to take advantage of the lower 2012 capital gains taxes were selling their luxury homes in high numbers the last quarter of 2012. Also involved was the new 3.8% Medicare surtax on investment income going into effect in 2013 as part of the Affordable Care Act. All factors combined, a high-earner would pay $88,000 less in taxes if they made a $1 million profit on their home in 2012 versus selling in 2013.

Bank of America Shrinking Mortgage Involvement

Bank of America is continuing a large-scale retreat from its costly expansion into the home mortgage market. This will concentrate more power amongst rival lenders like Wells Fargo and JPMorgan Chase. In this scaling back, BofA sold off about 20 percent of its loan servicing business as part of the new agreement with Fannie Mae and an $11 billion settlement over bad mortgages.

New York Times On Hardship Letters

An article this week in the New York Times discusses the hardship letter that lenders want to help them to assess the ability of the borrower to meet their mortgage requirements. Obviously, if the homeowner could pay their payments, they wouldn’t be writing the letter, and they shouldn’t assume that there is any sympathy at the bank. The article says that loss mitigators have mountains of letters and limited time, so getting into too much detail probably will not help, and it could actually result in telling them too much. The borrower should get the major hardship out quickly in the first paragraph or two, and tell the lender only as much as required to quantify the hardship.