Struggling homeowners who are considering a short sale or modification or are facing foreclosure will see another year of tax relief. The “fiscal cliff bill” passed by Congress, January 1st, included a provision to exclude borrowers from paying taxes on debt forgiven through a short sale, foreclosure, or loan modification.
Known as Mortgage Debt Relief Act of 2007, the act was scheduled to expire December 31, 2012, but received an extension for another year. Industry experts and political leaders from all sides expressed support for extending the act.
In November, 41 State Attorneys General wrote a letter urging U.S. House and Senate leaders to extend the act, arguing not extending the act would take away from the effectiveness of the national mortgage servicing settlement. Through the settlement, state and federal officials reached an agreement with five of the largest servicers to provide mortgage relief over charges related to foreclosure practices.
As of September 30, a report from settlement monitor Joseph Smith found servicers provided 21,833 borrowers with $2.55 billion in relief through first lien principal reduction modifications, which averages to about $116,929 in debt forgiveness for each borrower.
If the act did not receive an extension, borrowers who received relief in the form of forgiven debt would be liable to pay taxes on the debt. The Center for Responsible Lending and the Financial Services Round table also wrote letters asking Congress to extend the act.
This is good news for our industry; the only downside is that it is only good for another year. Short sales are not going to go away in the foreseeable future. Isn’t it time you start to take full advantage of what this market place has to offer you.
Short sales prevented 442,000 foreclosures in 2012!! That’s great NEWS!! That amounts to 442,000 total short sales done in one year nationwide.
Since 2009, the industry has seen 1.15 million short sales, with 422,605 short sales occurring in 2012 alone. In 2011, completed short sales reached 372,168.
“In the past year, there has been unprecedented work from the industry with respect to short sales as a viable mortgage solution,” said Eric Selk, Executive Director of HOPE NOW.
This is proof that short sales are dominating the way banks are handling their distressed assets. They told us that they were going to speed the process up, and it looks like they actually did. Short Sales are going to continue to be the way from here on out and my short sale system is the way to do it!
I am looking for more partners to negotiate debt for realtors and investors. And, I know you are looking to make more money. Let’s start something positive together.
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