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Mortgage Debt Forgiveness Act Extension?

Posted by Megan Brooks on November 5, 2013 at 3:51am in Short Sale Discussions

Could January 1st, 2014 really be the end of it? Anyone have any insight? I looked on the status of the bill and it says only a 1% chance of getting passed. This is unsettling. Thoughts/comments/ect. 

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Tags: debt, foregiveness, hafa, mortgage, sale, short
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Replies

  • Hericson Torres November 5, 2013 at 4:22pm
    I would rather benefit from the tax write-off if I were the bank! Most homeowners will qualify for the insolvency shield. Time to line yourself up with a local accountant who knows the mortgage debt forgiveness rules and insolvency calculations. Make sure the homeowner is "up-to-date" on tax filings and dues.
  • Wayne Brooks November 5, 2013 at 9:28am
    Danielle, as you pointed out the MDRA deals with the tax implications of Forgiven Debt. If a bank forgives the debt and issues a 1099, they can Not also pursue the deficiency....it's one or the other.
  • Jeff Payne November 5, 2013 at 5:16am

    It will make very little difference as most will be covered by IRS insolvency rules.  Not a big deal in my opinion

  • Danielle Petroske November 5, 2013 at 4:45am

    My fingers are crossed for an extension. I have not had any insight of an Extension into 2014.  I have been seeing, in MN, a huge decrease of short sales and foreclosures in 2013.  Many banks (this past year) have been denying short sales and/or asking the seller(s) for unrealistic cash settlements on qualified homeowners.  Short sales have been taking longer and have been very difficult to process.  We (MN Realtors) are also seeing that appraisals/BPO's ordered by banks are coming back with errors and inconsistencies when ordered for a short sale.  Several of us seasoned short sale specialists, have challenged banks in regards to this.  I just wonder, if banks are denying files and dragging their feet so they can go after homeowners for deficiencies in 2014 and the IRS can nail the homeowner(s) with taxes?  This would be another way for the banks to "recapture" losses. We have all seen, heard, and felt the layoffs of it's employees (which happened in the first quarter of the year) with the larger banks whom are "processing" these files. In my opinion, the banks have been  preparing for this M.D.F.A.E. to expire. It is our job to help and protect homeowners that are in hardships.  I feel like us short sale Realtors are on an island all alone with our homeowners.  :(

      

  • Shawn Wilkinson November 5, 2013 at 3:55am

    This is overblown. Most distresed homeowners will be covered by the insolvency clause afforded to them by the IRS. Look it up along with form 982. 

    Strategic defaulters should be concerned but not the typical distressed homeowner. 

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