I got so many comments and questions on my foreclosure blog yesterday that I wanted to follow up today with a few answers:
Are there taxes on a short sale? Not anymore. The Mortgage Debt Forgiveness Relief Act of 2007 freed up borrowers from getting taxed on the difference of their outstanding mortgage and what their home sells for in pre-foreclosure or a short-sale. Used to be that difference was considered ‘income’ by Uncle Sam as it qualifies as ‘forgiven debt’. Here’s the catch though: For those who have refinanced their home, you’re out of luck. The Relief Act only applies to the mortgage taken out to buy a home or improve a home, not if you refinance to say, free up money to pay for a car or other expenses. If you’ve refinanced, you may be out of luck with the IRS. For more info, head to IRS.gov.
Where can I find foreclosure listings for free? Most foreclosures listed online fall under the umbrella of a fee because it’s considered a service. Weigh if that cost makes sense for you. You can find homes listed in preforeclosure in your county clerk’s office for free but if you’re serious about buying and learning, you might not have the time to pop into the center of town.
Banks are not working with borrowers. Period. You’re right, for the majority of homeowners in trouble, trying to get someone on the line at a lender who actually cares and will help you through the process is rare. But, it is getting less rare as the ‘noise’ level of this historical mortgage mess gets louder and louder. And it should. And we can add to it here. The Hope Now Alliancejust upped its game this week to help struggling homeowners and even some employers are stepping in to help. This is an unprecedented time—new developments pop up every day in terms of options and I hope to bring them to you as soon as they’re available.
And to Steve, the Angry Renter: Don’t worry, you’ll get your own post soon…
More to come—keep sending me your questions and stories! And don't miss my live chat on Newsvine tomorrow at 1 P.M. ET where I'll be taking even more questions.
We need to let housing values go to where the naturally should be, we need a recession, we need those so we can become a healthy economy again. All these steps meant to stave off disaster just slow the healing process. If the rules of life change every time we play, how are we to learn to make better decisions? --Richard, CA
Posted on: 18 Jun 2008 4:56 P.M.
Lets not forget, that people were looking for the best deals. Whensome lenderstold them they didn't qualify for a certain amount, they just went to thers that would say yes. Now, they can't afford it and they want to blame the lenders. Some Lenders are to blame just like some borrowers are to blame. I work for a major bank, and I told a customer that they didn't qualify, but she went to 7 other places and someone said yes, now she is blaming the banks. Lets not forget everyone is an adult, nobody was forced to do anything. Every wants to get something for nothing. There are real costs associated with doing a mortgage. --Kevin, NY
Posted on: 18 Jun 2008 4:32 P.M.
What happened to personal responsibility? And where is it written that home prices can or must only go up? And why do Americans feel entitled to more home than they can afford? Homeowners in trouble want a bailout, but were these same "geniuses" going to donate the house appreciation they thought they were going to get to the government? Whose fault is it if you lose? Look in the mirror. --Jonathan, CA
Posted on: 18 Jun 2008 4:31 P.M.
As first time home buyers, we bought our condo in 2003. Since this home was our first, we were unskilled on the odds and ends of home buyership. We did not anticipate that my spouse would be laid off a few years later and we would refinance into an ARM to keep our home. Our lender told us it was the best thing to do since property values were going up rapidly. He did not explain the cost of the ARM option loan he put us in. And it was not until I received the actual closing documents that I found what type of loan we had. I hate that we believed our lender who seemed so willing to help. Currently, we sit on a mortgage that is scheduled to adjust soon. Thankfully, we only have a condo. When the payment adjusts, we would still be able to afford the payments. I have watched many of our friends purchase close to a million dollar homes at the same time; we were thinking "why don't we upgrade." However, many of them have since walked away because they could !
not afford their adjusting payments. I'm staying put. Even if the stupid lender took advantage of our situation, we feel obligated to stay put and we love our home; we don't wish to lose it. The brokers and agents made lots of money on people like us by selling these "Hybrid" sub-prime loans. So, for the people out there who think that their tax dollars are going to bail people like us out, just remember, there are two sides to every coin. --Susana, CA
Posted on: 18 Jun 2008 3:49 P.M.
Your readers can also find free foreclosure listings here: www.newbidselect.com
It is mostly government foreclosures. Individuals cannot submit offers, but they do have a list of licensed realtors who can submit an offer for you. --George, GA
Posted on: 18 Jun 2008 3:27 P.M.
I actually started off feeling sorry for so many caught up in the mortgage mess and then I heard enough of the stories and realized many of these people with less means than my wife and I were living a much better lifestyle because of their borrowing ways. We don't want to pay for it, our house is paid for and we have no other debt so why should we pay one penny to help someone who got in over their head? Why? --Rick, NC
Posted on: 18 Jun 2008 3:01 P.M.
My daughter was able to negotiate a refinance from 30 years to 40 years with the same interest rate and no fees. This reduced her monthly payment approximately 25%.
Your readers can find free forcloser listings at www.ushomeauction.com --Rick, AZ
Posted on: 18 Jun 2008 1:00 P.M.
I understand that many Americans are losing their homes and some even lost their jobs, but we are missing the big picture. Maybe we will not be able to afford a million dollar home, then buy a less expensive one. Maybe we won't be able to get a job with the same income but get a job nonetheless and work your way up again! Foreclosure and unemployment are scary and builds discouragement but life goes on. Some of us made the mistake to trust our lenders, we need to learn from that mistake and go from there. Money is not everything, thank God for your health and family and move forward. Compared to other countries, we are rich and we need to work with what we have. Believe me, I know. --Angie, TX
Posted on: 18 Jun 2008 12:36 P.M.
I can tell you first hand - the mortgage companies aren't helping. In January, I thought I had a loan modification. I have all the paper's showing I qualified. I was waiting for a title search to be completed. I'm still waiting. I got a phone call in May from my lender telling me I didn't have a loan modification and they didn't have any of my paperwork. Thank God for a fax machine. I was so fed up I sent a letter to the CEO. About 2 weeks ago, I got a call and they are going to try and rework my mortgage. I finally asked my contact, why don't they bite the bullet and refinance me at my original mortgage. I could start fresh. --M.D., OH
Posted on: 18 Jun 2008 12:15 P.M.
The "noise level of this historical mortgage mess" means nothing to the investors who hide behind the mortgage servicing companies if it is in the investors best interest to let properties foreclose. Believe it! Why else would a mort. co. sit on a shortsale offer for 4 months. Our lender did not accept, decline or counter the shortsale offer on our house. They simply sat on it until our house foreclosed. Please stop looking at this thing with rose-colored glasses. Dealing with mortgage companies is like being castrated with a butter-knife. Not blaming anyone but myself, but that's the reality. --Austin, VA
Posted on: 18 Jun 2008 11:01 A.M.
We called Suntrust Mortgage before we begin to default due to a job loss a couple of months ago. Suntrust's loss mitigation dept. told me that all they could do was a "90 day forbearance", which would go on my credit report as 90 days past due. How does that help anybody? That is not a program? Someone needs to bring attention to this. I will happily record a conversation and send it to you. I don't believe the banks are working with anyone. --Kurt, FL
Posted on: 18 Jun 2008 7:36 A.M.
I went through this bull in the 90s on a place I bought in Houston in '85. Shortly after I bought the little place, housing values began to plummet. I was devastated. I'm also the kind who can't stomach phone calls from debt collectors or the thought of bankruptcy, so after I had lived in the place for nine years, moved 1000 miles away, leased the place out for 11 years and was in it for a total of 20 years. I paid a property manager, collected close to the mortgage payment in lease, but usually had to chip in more, and claimed all the expenses on my income taxes. Repairing it and preparing it to sell was equally as harrowing. New foundation piers, rerouting the plumbing, new roof. It was practically a new house when I finally sold it. It can be done, but I'm not so sure I would recommend it. Walking, foreclosure and bankruptcy might have been better, even though I purchasesda couple of other places while still holding the Houston house and my credit's great, it is something I would not want to have to go through again. I was a different person once I got rid of that albatross. Now I here of all these people walking and see the value of my current place coming down from it sharp incline of a peak, but a person can only do so much, and I'm sick of the whole American market and economy. --Sally, FL
Posted on: 17 Jun 2008 11:49 P.M.