In This Issue:
As you can tell by the new structure of our newsletter, we practice what we preach here at Default Research. Basically, we have always encouraged our customers to present a fresh, professional look to attract new customers and also enable your existing customers to be proud of the product to which they are so loyal. With that in mind, Default Research also last week unveiled a more dynamic front page to our web site and the response has been excitingly positive from both new and existing clients. Of course the lists have not changed one bit, and everybody will continue to receive the freshest foreclosure leads in the industry with top notch customer service that stands behind those lists.
Our customer service, though, goes way beyond just providing lists. You can see that in action in our article about tax time and two new ways Uncle Sam is collecting taxes when it comes to foreclosures. Now, when it comes to foreclosures in California, even Uncle Sam might need to turn to us for information. Check out our comprehensive review of the Los Angeles County when it comes to foreclosures down to the exact zip codes packed with properties in distress and the cities that avoided the mortgage mess. One final article to check out would be the mess some home owners associations are finding themselves in as the foreclosures increase and people are not paying their condo fees.
So, another month of great information for our clients and a new look for our web site as we freshen up our look. Have a great April and please keep your great feedback coming on the new web site.
Tax Time
As if there were not enough ways for Uncle Sam to collect taxes, there are two other ways now that could affect property owners in foreclosure.
For example, depending upon the bank, a homeowner who sells a property through a short sale may end up owing taxes on the difference between the original amount owed and the selling price at short sale. This is called a “deficiency judgment and usually ends up on a 1099 for the homeowner that they must declare as income on their yearly taxes. A distressed property owner may get the bank to accept the short sale price as full payment on the loan and not pursue the deficiency judgment, but since that course of action may negatively affect the bank’s year end reporting, it is not likely to happen.
Consider the person who turns their back on their mortgage, as discussed in one of our blogs last month. This “strategic default” is a last resort, but it does not end with moving out of the house. Besides negatively affected credit, the homeowner will most likely receive a 1099 with the unpaid mortgage considered as “debt forgiven” by the IRS, and thus income on which taxes must be paid. The only way out of paying tax on that income is bankruptcy.
Of course it is always good to talk with an accountant, but these tax tips should help you better navigate tax time!
Foreclosures and Their Effects on Home Owner Associations (HOA)
As more and more people default on homes, HOA or Homeowner Association’s continue to remain under funded as defaulted homeowners cannot pay their fees. Generally speaking people will stop paying their HOA fees before they stop paying their mortgage. As the foreclosure process proceeds, arreared HOA fees can add up for months. As more and more property owners are unable to pay their HOA fees, the association must dip into their reserve account to cover their costs.
Many associations are now facing fast depleting or already depleted reserves. This is a very large problem for existing homeowners and prospective purchasers. To cover their costs, HOA must increase their dues to cover this gap and rebuild their reserve. To further compound this problem, reserves are to be used to cover regular maintenance of lawns, pools, facilities, buildings, etc. But due to fiscal shortages, much needed renovation and maintenance is not being done, leading to mosquito infested pools, non functioning elevators and even power loss in common areas due to unpaid electric bills.
The moral of this article… Be sure to know that the HOA of your new property is in good fiscal health before purchasing.
LA’s Story…
Being that Los Angeles County is still leading the nation in foreclosures, it is still the number one list that our savvy clients request. Our clients know the hot spots and the numbers do not lie! In fact, in 2010, Default Research found that approximately 71 percent of properties entering into foreclosure in L.A. County were single family residences, 16 percent were condominiums, and seven percent were multiunit buildings of less than 10 units. In addition, commercial properties made up 1.29 percent of units, apartment buildings made up .50 percent, warehouses made up .26 percent, and industrial properties made up .15 percent. Here are more numbers and reason to check out our L.A. lists!
| Top 5 Highest Foreclosure Rates | ||
| Rank | Zip | Percentage |
| 1 | 93536 | 7.53% |
| 2 | 91381 | 6.69% |
| 3 | 93535 | 6.38% |
| 4 | 93532 | 6.13% |
| 5 | 93551 | 5.80% |
| Top 5 Lowest Foreclosure Rates | ||
| Rank | Zip | Percentage |
| 1 | 91101 | 0.05% |
| 2 | 91204 | 0.07% |
| 3 | 90212 | 0.08% |
| 4 | 90245 | 0.08% |
| 5 | 90013 | 0.09% |
For more information including foreclosure rates of each individual zip code you may visit http://www.defaultresearch.com/preforeclosure/california/county/los-angeles/