Where we have come...
With the recent changes in short sales, including The Mortgage Forgivness Debt Relief Act and Debt Cancellation that began in 2007 and is scheduled to end in 2012 which generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt is forgiven in connection with a foreclosure.
Up to $2 million of Forgiven Debt is eligible for the exclusion (1$ million if married filing seperately). the exclusion does not apply if the discharge is due to the services performed for the lender or any other reason not directly related to a decline in the home's vaue or the taxpayer's financial condition. More information can be found in IRS publication 4681. Canceled Debts, Foreclosures, Repossessions and Abandonments, see IRS news release IR-2008-17.
The HAFA Mortgage Program (Home Affordable Foreclosure Alternatives)
This program is a government expanded initiative from the Home Affordable Modification Program (HAMP). This HAFA program provides incentives for servicers to allow short sales or deeds-in-lieu as positive options for elgible homeowners in default who wish to avoid foreclosure. Participation in HAFA cannot save the homeowner from losing their property, however it can eliminate the effects of a foreclosure on the homeowner's creidt. Financial incentives for participation in the program include a $1,000 servicing bonus for lenders and a $1,500 relocation bonus for displaced homeowners.
Obama Administration's $600 Million of "Hardest Hit Fund" Foreclosure Prevention Assistance. The Making Home Affordable (www.makinghomeaffordable.gov) North Carolina, Ohio, Oregon, Rhode Island and South Carolina will receive funding to support local initiatives to Assist Homeowners Struggling Due to Unemployments. "These states have designed targeted program with the potential to make a real difference in the lves of homeowner's struggling to make their mortgage payments because of unemployment," said Treasury Assistant Secretary for Financial Stablility Herb Allison.
There has been help available for homeowners in distress due to financial difficulties. The biggest hurdle is getting the word out to those who need the help. There are many real estate agents who are Certified Distressed Property Experts (CDPE certified) who have both invested the time to learn how to navigate the waters of short sales and the experience to help homeowners avoid foreclosure.
In the 8 years that I have been doing short sales I have lost only 1 short sale to foreclosure and it was because the seller wouldn't get the paperwork in or respond in a timely fashion. Getting the paperwork in to the lender is crucial. It is really a small inconvenience for having your mortgage forgiven and being able to move on without the cloud of foreclosure hanging over you.
I do see success stories more and more with short sales and I credit my ability to being able to get them done to having the CDPE training. If you know anyone who is facing foreclosure please call me. I have a network of other CDPE agents across the United States! There is help available. Each individual should weigh thier options closely and consult an attorney for legal advice, an accountant for tax advice and a Realtor for real estate advice.
Comments(2)