I had a homeowner call and ask "Did she have to keep paying on the Promissory note that she signed 5 yrs ago before the Mortgage Debt Relief Act ? I did refer her to an attorney instead who is a CPA and Atty. What would you have done?
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I think you did exactly what I would've done here in Palm Springs, CA..refer to an attorney. Good job!
You did the right thing by referring her to the CPA. Leave it there.
That is very true. The Mortgage Debt Release Act states that the IRS will not hold someone liable for paying income taxes on the "income" received from the debt that was waived under a foreclosure or short sale. The lenders still have the option to pursue the debt from a short sale if they so desire.
I would have done exactly the same thing. If you told her to stop paying and it damages her credit report, guess who she will turn around and rip to pieces? Exactly. Advice is easy to give but the right advice can make a world of difference. Now, she no doubt has some refinance options available. She could grab the low rates and refinance her home and perhaps wrap the Promissory note in or even get a HELOC to pay it off (if the interest rate is less).