Bad Things Can Happen to Good People
OK. Bottom line is bad things happen to good people......every day. You've been responsibly making mortgage payments and other financial obligations like clock-work for years. Then suddenly, something bad happens to you -- something unexpected and overwhelming that results in an inability to make payments. This may be an involuntary hardship reduction or interruption of income due to one or more of the following:
· Divorce or legally documented separation
· Natural or man-made disaster
· Serious illness of an immediate family member
· Disability (short term or permanent)
· Death of an immediate family member
· Self-employed borrower with a decline in business
· Unemployment, under-employment, or a mandatory pay reduction
· Increase in expenses due to disability, illness or disaster
Sometimes Loan Modifications Just Don't Work
The mortgage company might add the missing payments to the total loan balance, lower your interest rate, turn your adjustable rate into a fixed rate, or extend the lenght of your loan. Unfortunately, most people do not qualify for a loan modification because of existing car paymens, student loans, medical bills, credit card debt, or other financial obligations. But because of your reduced income or increased bills, the mortgage company won't cooperate. And then you receive a Notice of Foreclosure in the mail. So then what can you do?
There Really Is a Silver Lining in a Short Sale
You can still obtain help you at no cost. Yes, at NO COST to you. For many homeowners, especially those 30 to 90 days behind on payments, the short sale is the most practical option to avoid foreclosure. In a short sale, you sell your home, but the lender agrees to accept less than the amount you owe. In some cases, this means you will erase your entire debt and could rebuild your credit rating in just 2 years (instead of the usual 5-7 in a foreclosure and 10 years in bankruptcy). So in about 2 years, you could qualify for a new home loan. Also, short sales lessen the adverse impact a foreclosure can have to the surrounding community. After a short sale is completed, the sellers account status can be shown as 1) paid in full – as agreed, 2) paid – settled, 3) paid – unrated, 4) paid – less than owed. How the lender reports the closed account is negotiable.
Also, the Feds Have Provided Forgiveness of Mortgage Debt Just for Short Sellers
In response to the growing economic crisis and millions of foreclosures, the U.S. Congress passed H.R. 3648, “The Mortgage Forgiveness Debt Relief Act.” This law took effect in December, 2007, and has been extended to 2012 under the Emergency Economic Stabilization Act. This new law makes it possible for lenders to forgive a portion (or all) of your mortgage debt without creating a tax liability for you.
Under normal circumstances, if a lender forgives a debt, the government sees that forgiven amount as personal income. Therefore, it is taxed. For example, if you owe $100,000 on your loan and the lender forgives $50,000 of that debt, you must add that $50,000 to your personal income and pay taxes on it.
H.R. 3648 lays the groundwork for you to get your debt under control without a tax penalty. So if you are at least 30 days behind on your mortgage payment, your lender can forgive a significant portion of your debt IF you go through the correct process. Admittedly, the process can be complicated, and that is where qualified and certified Realtors step in.
So Reach Out for Professional Consultation Today!
There is plenty of misinformation in the marketplace today; even from supposedly reliable sources. What you need is professional and reliable information. In Wake County North Carolina, we provide an intial 1 (one) hour complimentary consultation with our clients. This includes a licensed North Carolina Real Estate Attorney as part of the consultation. Each of our team members has earned the North Carolina Short Sale Specialist certification. The Certified Short Sale Specialist (CSSS) designation is the FIRST and ONLY North Carolina State specific Short Sale designation. CSSS designees are professionals dedicated to helping North Carolina homeowners avoid foreclosure.
About The Author
Ken Smith lives and works in Wake County of North Carolina. Please comment with your thoughts about short sales. All perspectives are appreciated. You can learn more about Ken at www.goldensrealty.com.