Mortgage Debt Forgiveness Act on the GO Now!

Mortgage Debt Forgiveness Act on the GO Now!

The Senate approved the long time waiting extension of the Mortgage Debt Forgiveness Act , bringing home owners who did a short sale this year one step closer to tax relief. Home being soldThe bill, which passed the House of Representatives two weeks ago, is expected to be signed by President Barack Obama. The Senate approved the bill in a 76-16 vote.

The Mortgage Forgiveness Debt Relief Act of 2007 was created to help distressed homeowners; that were faced with taxes after a Principal reduction; however this law expired Dec. 31, 2013 making distressed home owners responsible for paying taxes on “phantom income” from the forgiven debt. The tax on a 2014 short sale or workout would have been due this coming April 15 had Congress not extended the measure.

The extension will only apply to short sales conducted in 2014. Any further extensions will have to be considered by the new Congress, which begins its 2015 session in January.

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House Passes extension on Mortgage Forgiveness Debt Relief

House Passes extension on Mortgage Forgiveness Debt Relief

Mortgage-Forgiveness-Debt-Relief-ActLast night the United States House of Representatives extended the income tax exemption on mortgage debt forgiven in a short sale or a workout for principal residences.

The bill containing the income tax exemption on forgiven mortgage debt and other expired tax provisions passed by a vote of 378 to 46. However, The United States Senate has not yet voted on the measure.

We hope for the best. Let’s get it extended!

Foreclosure Beware!

Foreclosure Beware!

We are experiencing one of the biggest foreclosure filling increases for the last four years.

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The number of foreclosure filings experienced a big jump from September to October alone. These filings include but not limited to notice of defaults, scheduled auctions, and bank repossession.  According to RealtyTrac this is the largest month-over-month jump since the peak of foreclosure activity in March 2010.

However even though Foreclosure filings reported were into a considerable 123,109 U.S. residential properties in October,  fortunately still represented an 8 percent decline overall in the number of foreclosure filings from October 2013.  This is equivalent to one house for every 1,069 residential properties in the U.S. reported a foreclosure filing in October based on the latest report from RealtyTrac.

These numbers did not take us by surprise due to that over the past three years an average of 8 percent monthly uptick was scheduled for foreclosure procedures in the country.

On the other hand, REO activity (lenders repossessing properties via foreclosure) increased by 22 percent from September. The largest month-over-month increase since June 2009.  Overall, lenders repossessed 27,914 U.S. residential properties in October, as reported by RealtyTrac which is an agency that monitor housing foreclosure activities in the country.

Fact or Fiction: Tax relief for homeowners’ on debt forgiveness.

Fact or Fiction: Tax relief for homeowners’ on debt forgiveness.

Congress is now back from its summer vacation, so the burning financial question on thousands of homeowners’ minds right now is this: Are you finally going to help the consumers who are underwater on their mortgages and have already accepted a principal reduction by their lenders? 20131125_fact copy

Under current federal tax law, when the homeowners accept reductions in what they owe, the amount forgiven by the bank gets reported to the IRS, and the owner is hit with taxes as if it were ordinary income.

The Mortgage Forgiveness Debt Relief Act of 2007 was created to help distressed homeowners; that were faced with taxes after a Principal reduction; however this law has already expired Dec. 31, 2013.

If Congress does not extend the law retroactively thousands of underwater homeowners could be hit with tax burdens they may not be able to handle. We hope for the Best!

A Short Sale is Better Than a Foreclosure

A Short Sale is Better Than a Foreclosure

A Short Sale is Better Than a Foreclosure

By Sandy Flores

Special to Excelsior

Foreclosure (foreclosure) and short sales (short sale) are types of procedures with very complex situations. The circumstances giving rise to these types of transfers are delicate and not easy for the owner. However, they are also similar because without knowledge of how they develop you could find yourself in a confusing and complicated territory. Whether you are in the process of foreclosure, if selling your home does not cover your total balance to cancel existing mortgages, you may consider a short sale as one of the best options.

The short sale is one alternative for those borrowers who are eligible under the program Capacity and Stability Pay for Homeowners (HAMP, for its acronym in English), which allows you to keep your property through a modification.

Assistance Programs to Avoid Foreclosure (HAFA for short) offer cash incentives to homeowners and financial servers and investors to encourage short sales and enable families and avoid the process servers execution is very expensive and minimize the negative impact of foreclosures on borrowers, financial institutions and communities.  Short sales are transactions made with careful coordination and close cooperation between a number of parts: servers, appraisers, borrowers, buyers, Realtor’s, title agencies and often mortgage insurance and mortgage holders seconds lines of credit or home equity loans.

A short sale provides a better outcome for borrowers, investors and communities. These alternative programs to avoid foreclosure simplify and streamline the short sale process providing procedures, deadlines and standard documentation. Also, selling your short sale property gives you some control with self-tracking sale. You stay in the property even if the payments were not made until the property has been transferred through the short sale.

You can meet the new owners on better terms and may be eligible under the rules of Fannie Mae, to purchase another house within a period of approximately two years instead of five to seven years if your credit report does not reflect “repossession”.  If your bank approves the short sale, it has the right to issue a 1099 for the difference, due to a provision in the IRS code about debt forgiveness. But if you qualify for Tax Relief Department of Revenue, could exclude the payment of these taxes under the law of the Mortgage Forgiveness Debt.

Foreclosure, on the other hand, is that the bank has the right to take legal action to recover the property offered as security for a loan, and whose payments have not been made, resulting in the breach of contract was initially made when acquired the property. The bank will continue waiting for restitution payments due and take appropriate action to request that such payments are made and who makes up with the repayments. Now, if at the end of three months has not cured the restoration of such payments, then the bank will start the foreclosure process foreclosure or execution. After the foreclosure process begins with the registration of the “Notice of Default” or known in English as “Notice of Default”, that your bank sends you, you will be informed no less than 90 days approximately the date your property could be auctioned to the highest bidder.

All types of performance require that these notices are published to all stakeholders to be notified as to the measures. Once the property is sold by public auction, families have a very short time to find a new place to live and move out before the sheriff publish eviction.

Among other options, homeowners who are in foreclosure have the right to rescind (cancel) a transaction within five days before the auction. The banks must notify the seller of this right, including a copy of the form will allow sellers cancel.  Time goes so fast! Take immediate action if you are going through this situation. Not only have less time to take action, but also less possibilities and solutions to work with them and avoid repossession of your property. As always, it is advisable to seek advice from a professional to determine and make a more informed decision and advantageous for you.