Mortgage Forgiveness Debt Relief Act for 2014?

Summit-Front-Elevation.jpgAlthough some homes are still recovering their values before the economic collapse from their highs in 2006 and 2007, there are some neighborhoods that will not regain their values for years to come.  In Florida, this is especially true in some areas of Tampa Bay.  This leaves a lot of home owners upside down.  In other words, their home values are less than their mortgages.

In 2007, Congress passed the Mortgage Forgiveness Debt Relief Act to help people who loss of their homes. This act was passed to help former homeowners from getting a large tax bills after short Mortgage-debtselling their homes.  A short sale is “a sale of real estate in which the proceeds from selling the property will fall short of the balance of debts secured by liens against the property, and the property owner cannot afford to repay the liens’ full amounts and where the lien holders agree to release their lien on the real estate and accept less than the amount owed on the debt.”[1]

Benefiting both the property owner and lender, a lot of people have taken advantage of a short sale rather than letting their home become foreclosed upon.  A short sale will have less of an impact on your credit score than a foreclosure.  If the lender does not have to foreclose on the home (saving the lender on attorney fees, carrying costs, maintenance expenses, etc.), most lenders will waive the deficiency judgment against the previous property owner.  However, the lender does not have to waive the deficiency judgment.  Although a lender might forgive the deficiency judgment, the property owner is still liable to get a tax bills after short selling their homes.  In other words, the former property owner losses his home and the lender allows the borrower to accept a price that is less than the amount owed, but the borrower has to pay taxes on forgiven debt because it isn’t money that was earned.  For example, someone owes $150,000 on a home but can only sell it for $125,000. The difference, $25,000, would be considered taxable income. The Mortgage Forgiveness Debt Relief Act allowed the borrower to have this debt to be forgiven (Up to $2 million of forgiven debt qualified for the exclusion).  It looks like this act is not going to be extended for 2014.

If the Mortgage Forgiveness Debt Relief Act is not extended for 2014, I predict that more people will just opt for foreclosure and stay in their homes longer rather than short selling their homes.  This will cost lenders a lot of money and delay a housing recovery.Sandpiper.jpg

If you are interested in buying a new home or an existing home, please contact me (Alan Lane with Keller Williams Realty at 2119 W Brandon Blvd, Brandon, Florida  33511) and I can help you find a new home in the Tampa Bay Area.  My email address is alanlane66@gmail.com or call me at 813.205.9280.  If you are just starting your search, you can search the MLS for homes on my website at this link.

1 “Real Estate Short Sale”. Investopedia. Retrieved 13 April 2012.

About these ads

One thought on “Mortgage Forgiveness Debt Relief Act for 2014?

  1. Thanks for discussing your ideas. Another thing is that pupils have a selection between government Home
    Mortgage Rates Canada along with a private Home Mortgage Rates Canada
    where it’s easier to opt for Home Mortgage
    Rates Canada debt consolidation than over the federal Home Mortgage Rates Canada.

    One thing is that when you’re searching for a Home Mortgage Rates Canada you may find that you’ll want a cosigner.
    There are many cases where this is correct because you
    could find that you do not possess a past Mortgage Rates
    Canada score so the lender will require that you’ve got someone cosign the money for you.
    Interesting post.
    Thank you for this article. I might also like to state that it can possibly be hard if you are in school
    and just starting out to initiate a long Mortgage Rates Canada rating.

    There are many pupils who are simply just trying to endure and have an extended or positive Mortgage Rates Canada history can often be
    a difficult element to have.
    I have learned quite a few important things via
    your post. I’d also like to state that there can be situation that you
    will make application for a Mortgage Rates Canada
    and do not need a cosigner such as a Federal government Home Support Mortgage Rates Canada.
    In case you are getting Mortgage Rates Canada through a classic
    financier then you need to be able to have a cosigner
    ready to assist you. The lenders are going to base any decision on a few variables but the biggest will be your Mortgage Rates Canada
    worthiness. There are some Mortgage Rates Canada providers that will furthermore look at your job history and come to a
    decision based on that but in most cases it will depend on your scores.

    One other issue is that if you are in a scenario where you
    will not have a cosigner then you may really need to try to wear out
    all of your Homeal funding options. You will find many awards and other scholarship grants that will provide you with funds
    to help you with college expenses. Many thanks for the post.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s