When a homeowner sells his/her house in a short sale or is foreclosed upon, the amount of the forgiven debt is usually taxable under California and Federal Law.
Federal tax relief on forgiven real estate debt is already provided under the Federal Mortgage Forgiveness Debt Relief Act of 2007.
State tax relief for California distressed homowners is [...]
24% of all homeowners in the U.S. (about 11 million) have houses that are “under water.” In other words, the homeowner owes more on the house than what the house is actually worth in today’s slow housing market.
Many of these underwater houses are in Sunbelt States like California, Arizona, Nevada, and Florida.
If you’re an under-water homeowner, you have three options:
1. [...]
Why are government programs failing to mitigate the nation’s foreclosure problem?
And why haven’t more Lenders voluntarily reduced mortgage principals?
The answer to both of these questions has to do with the high number of mortgage loans that were securitized.
When a mortgage is in a security, it’s owned by groups of investors. Even though a [...]
The expanded plan pays lenders to reduce any unemployed homeowner’s payment to as low as 31% of his/her income for up to six months. This sounds like a resurrection of what used to be known as a Forbearance Agreement.
Moreover, if a homeowner has an over-leveraged house and stays current on his/her monthly payments, the new [...]
Every government program since 4th quarter 2008 failed in solving the nation’s foreclosure problem, because most houses are over leveraged.
When homeowners were granted loan modifications that reduced monthly payments, many still walked away from their houses, because reductions in loan balances were out of the question and homeowners weren’t comfortable waiting years to rebuild lost [...]
In 2007, California State and Federal Legislation temporarily exempted state and federal tax on forgiven debt. While the CA Law expired in 2008, the Federal Law (Federal Mortgage Forgiveness Debt Relief Act of 2007) remains in effect through 2012.
California Law may soon conform with Federal Law on this issue once again thanks to the [...]
There’s intermittent talk in the news about Strategic Defaults, but what is a Strategic Default?
This is when a homeowner with one or more mortgages on a property can afford to make the monthly mortgage payment(s) but chooses not to, because today’s value of the house is less than the total amount owed on the mortgage(s).
Some homeowners view whether or not to strategically default as a [...]
Since 1st Quarter 2009 and up to now, Federal Homeowner Assistance Programs that respond to the bursting of the housing bubble were designed to keep homeowners in their houses via loan modifications.
These Federal Programs failed miserably, because lenders refuse to do loan mods on overleveraged houses and most mortgages are bundled into Mortgage Backed Securities which seriously limit [...]
Just last week, I got phone calls from three different people who kept at least one deposit account (Checking, Savings, Money Market, CD, etc.) at the very same bank that issued them debt (via Cr Card, Mortgage, Business Line of Credit (BLOC), etc.).
Two of the callers informed me that their bank dipped into their checking accounts (with no warning) and withdrew sufficient funds [...]
Tami Luhby at CNNMoney.com wrote a report today on the roll-out status of President Obama’s two-part (Affordable Refinance or Loan Modification) $75b Foreclosure Prevention Plan announced on February 18, 2009.
Go here to read it:
http://money.cnn.com/2009/03/19/news/economy/Obama_foreclosure_plan/index.htm?source=yahoo_quote
This report also provided a website that distressed homeowners can visit to determine whether or not they qualify for assistance under the Plan. Here it is:
http://makinghomeaffordable.gov/