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  • Bonnie Erickson, REALTORĀ® in the Minneapolis and Saint Paul area of Minnesota can be contacted by phone at 612-419-1829 or by e-mail


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January 15, 2008

Comments

Debt Rescue

Some of the nations biggest lenders are going to set aside money to pursue the balance owed, as an act of recovery for their ledger.
Truth be told, this is a chance for a lot of consumers to take back what was taken from them - their home.

woonlasten verzekering

This is absolutely nice update to see and I hope you will continue the same way in the future as well.

John Beck Tax Foreclosure

Some of the nations biggest lenders are going to set aside money to pursue the balance owed, as an act of recovery for their ledger.
Truth be told, this is a chance for a lot of consumers to take back what was taken from them - their home.

azeemi

This is a good thing. Some one who is foreclosed on has no liablity but some one trying to sell their home is charged for a phantom income.

MThar

Great blog! I am a collector, and am now working a mortgage default portfolio. It strikes me 'strange' how little consumers know about this new law, especially when facing a multi-thousand dollar deficiency balance. I was in the mortgage business for almost 15 yrs., from a Branch Manager up through VP of Operations, and I spend more time explaing that NOW is the time to find the money to settle out the balances still owed, be it via foreclosure or a short sale.
If I were to offer one bit of advice? If a consumer cannot get the lender to accept the short sale as a SETTLEMENT IN FULL, then take advantage of this tax bill and settle up on the balance still owed-we can negotiate down to 25% of the balance-not bad. Some of the nations biggest lenders are going to set aside money to pursue the balance owed, as an act of recovery for their ledger.
Truth be told, this is a chance for a lot of consumers to take back what was taken from them - their home.
The collections on this debt is tough, and it isn't fun to be sure, but they did sign the mortgages notes, and probably should have been better informed consumers.
No one that I have spoken to was forced to sign a No Income - No Asset loan, or the Stated Income products. When I ran an Underwriting department (three different one's actually) I knew there was default written all over it. But yet the consumer signed the docs, it fit the greedy WS Investor portfolio for an MBS, and the broker made some serious cash. And the lenders YSP as well. And realty folks did as well. The market was out of control, and now we are seeing the repercussions....

Bonnie Erickson

Barbara, If you qualify under the mortgage debt forgiveness act, I believe you will not be liable. If you don't qualify for the forgiveness, then it depends on how the lender you defaulted with wants to treat the default. Some actually don't do anything. Others go after the defaulting owner for a deficiency judgment, issue a 1099 form to consider their loss as income to the owner, or to get a repayment plan made for the deficient amount. The best person to answer this for your specific situation is a real estate attorney.

barbara

Bottom line - if I walk away from a mortgage, am I liable for the amount left over after the lender sells the property?

Bonnie Erickson

PJP, The program listed above applies to a very narrow group of homeowners who purchased within a specific period of time and only to loans used to acquire the property, not refinanced loans. Short sales are being done in St. Paul. In fact they have become so common that listing agents are sometimes putting "not a short sale" or "no waiting for bank approval" in their listing comments. Some sellers are negotiating with their lender for to pay off the unpaid amount left after the sale. Some will have tax consequences. Some will qualify for debt forgiveness.

Terry, My reading of the bill from the links given in my article leads me to think the forgiveness act only applies to the original "acquisition" loan, not to refinances or "non-purchase" money loans. Check with a real estate accountant or attorney to make sure.

Terry e Thomason

Can someon tell me if thi s effects non-puchase money loans. What if someone refinanced the puchase loan and the refinaced loan is the one selling short?

PJP

What does this mean for a homeowner? Even if I'm not in foreclosure, can I sell my home in a short sale and not pay taxes? If so, why is everyone not trying to sell their homes? If not, what qualifies you?

Bonnie Erickson

Wayne, Thanks for the compliment. I talked with a mortgage originator today who had also missed the change. However, he has a lot of exposure to the FHA Secure program and it's so tightly defined that most people are not eligible. I know it will help some people, but maybe not enough.

Wayne Long

Wow! I did miss this somehow. Thanks for the update. You have a great blog all around by the way.

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