Frustrated With Loan Modification? Consider Short Sale

I recenlty read a great article written by Paul Kiel of the watchdog group ProPublica. The article addresses the rise of Loan Modification Failures. Mr. Kiel writes that "of the 1.2 million homeowners who have begun a modification in the last year, about 265,000 are stuck in "trial periods" for six months or more"'.
Mr. Kiel further writes that homeowners and advocates list common complaints such as mortgage servicers frequently ask for the same information over and over; give contradictory information; make mistakes and in the end, many homeowners under these trial periods end up worse off than if they'd never been on trial.
As a real estate professional, I have offered consultation with many of these distress homeowners who are frustrated, angered and under duress. Often times they just want to throw their hands upward and give up. They want out and they are contemplating abandoning their properties.
To that end, Short Sale becomes the only option I urge these homeowners to consider. Why? Short Sale minimizes damage to credit as an approved short sale means a creditor is willing to settle the debt in full for the amount owed by the debtor for a value that is less than what the creditor is owed. The remaining balance is forgiven and the homeowner will no longer owe anything to the creditor. The caveat is that the homeowner will likely receive from the creditor a IRS-1099 form for the loss amount difference which then must be reported as income on the debtor's tax return. If it's a principle residence, any Capital Gains Tax may be forgiven under the Mortgage Debt Relief Act. Always best to consult with Tax Advisors on these matters.
In contrast to the action of abandoning the home, the creditor no doubt will effect forclosure action and may release the securiity interest of the property under a Release of Lien once resold but the amount owed is not forgiven. The homeowner still owes any balances to the creditor and furthermore, maybe liable for damages as consequences of their actions.
If you would like to read Paul Kiel's article entitled "Loan Mod Logjam Continues for 265,000 Homeowners; Failures Jump"; visit www.propublica.org/site/author/paul_kiel
For more information about Short Sales or for a FREE consultation, call me at 888-713-7261 or visit my website at http://www.jesserosete.com/