H.R. 3648 Mortgage Foregivness Debt Relief Act 2007
Today, President Bush signed the Mortgage Forgiveness Debt Relief Act of 2007, which will help Americans avoid foreclosure by protecting families from higher taxes when they refinance their home mortgages. This Act will create a three-year window for homeowners to refinance their mortgage and pay no taxes on any debt forgiveness that they receive. Under current law, if the value of your house declines, and your bank or lender forgives a portion of your mortgage, the tax code treats the amount forgiven as income that can be taxed. This Act will increase the incentive for borrowers and lenders to work together to refinance loans and allow American families to secure lower mortgage payments without facing higher taxes. Read the whole story here…Thousands of home owners were waiting for the Senate vote on HR 3648. It is the Mortgage Forgiveness Dept Relief Act of 2007. Here is a copy of the actual bill.HR 3648 Mortgage Foregiveness Debt Relief Act 2007The bill will be retroactive applying to anyone that has had mortgage dept discharged or forgiven back to January 1, 2007 from foreclosures or short sales. Congress passed the bill on October 4, 2007. It passed with votes 386 to 27. The President asked for the legislation so the Senate passed it quickly.This bill will help the insolvent homeowner from taking an addition beating on a 1099 IRS gift of their short sale or foreclosure. In the past only a bankruptcy would protect the homeowner from the taxation of a 1099 short sale or foreclosure debt.
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- Jan 2, 2008: area estate real scottsdale
Corey, It’s about damn time the Act was signed. It’s great two-fold… The obvious being for the homeowner in that it releases and additional financial burden post foreclosure or short sale. For me, it hasn’t been east to tell a homeowner that we’ll get your home sold through a short sale, but oh yea, you’re gonna have to pay “xyz” in taxes for doing so.
It helps us the investor out in that not that we didn’t have incentive or will to short sale a home prior to this Act being passed, but now, We can fel 100% good about it in that the homeowner is being “completely” releived of their mortgaged resposibilities.
This is fantastic and I’ve got great news to call my prior, current and future clients about! Thanks for the update once again and yes… I am being a servent.. LOL! God bless!
“for homeowners to refinance their mortgage and pay no taxes on any debt forgiveness that they receive.”
Given the above quote, I perceive that this is for owners who refinance and stay in their houses. Is this actually happening that the current lein holders are dicounting and then the current owner stays with a lower loan debt?
If so, what would be the processs to get them to agree to this kind of scenario?
I was curious if you knew how exactly this bill is supposed to benefit the lender? It was stated in the article that “This Act will increase the incentive for borrowers and lenders to work together to refinance loans and allow American families to secure lower mortgage payments without facing higher taxes. ” That sounds beneficial to the homeowner but is there really is any incentive for a lender, that is not mentioned so far, to encourage them to refinance a loan. Say where the principal is higher than the current value of a home or otherwise?
Secondly, the article mentions the benefits of forgiving the gift tax regarding a 1099 on a short sale. But what about the deficiency judgment? Does this bill give back any funds to the lender when the loan is “shorted?” I always ask for a deficiency judgment waiver, does this act effect that at all?
Any help would be much appreciated. Thank you!
Speaking the language of politicians, the HR bill only addresses the Internal
Revenue Service Code and does not address civial law remedy that may be
applicable.
It is fantastic news and the right thing to do for the President to do this. I hope that the Australian Government will follow the same.
Letterio Giliberto
SYDNEY AUSTRALIA
thank you Corey i just wanted you know you as soon as i can get funds iwant you teach me ever thing you know because i can trust you for what you teach and say about your short sales and Real Estate that is blessing to me they so much that you can learn from you that you can trust what you teach Corey thank you and God bless you and Merry Christmas to you ! Happy New , I hope soon that i get to talk to you and you teach me ever thing you know john w reynolds ,
this John w reynolds My adderess is 808 Surgarloaf Road Hendersoville NC, 28739 phone is 828 6061203 thank you corey .Boatright .
In your P&S agreement w/ the homeowners, have a clause that states that acceptance of this offer by lender is payment in full, thereby waiving any right to a deficiency judgment….we couldn’t say anything in the contract before about the IRS code and the lender 1099-ing them, but we can have the right to a def. judgment waived…this Bill is great for us and for the homeowners.
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Homeowners receive NO debt forgiveness when they REFINANCE, only when they SELL.
No lender is going to discount the mortgage to a refinancing homeowner. At least, not yet.
Cory,
I have the same question as Doug Borque regarding ” for homeowners to refinance their mortgage and pay no taxes on any debt forgiveness that they receive.”
Given the above quote, I perceive that this is for owners who refinance and stay in their houses. Is this actually happening that the current lien holders are dicounting and then the current owner stays with a lower loan debt?
If so, what would be the processs to get them to agree to this kind of scenario?
Please advise at your earliest convenience and thank you for your time and advice. I wish you a healthy and wonderful New Year 2008.
Yvette
Does any of this law apply to investors who are behind in their payments on their homes including one they live in?
Can we apply this rule to 2nd home?
For simplicities sake… so do we get 1099′d on a short sell or not? sorry I ‘m not well versed in legal vocab….
This this apply to investment properties?
found your site on del.icio.us today and really liked it.. i bookmarked it and will be back to check it out some more later ..
But they can never be more mistaken, because the ability to eliminate their debts is very much within their reach. All they have to do is avail of an Atlanta consolidation debt loan. Financial institutions in Atlanta have already started offering this type of loan to help residents of the city get rid of their debts. These institutions recognize that many people are indeed very willing to rid themselves of debt, and all they need is just the right amount of support to get right back on track. This is the reason why they designed the Atlanta consolidation debt loan.
With a deed in lieu, a forecloser, or a short sale; the bank can give you a deficancy judgement. Does this HR3648′ forgive that problem as well as the tax 1099 problem????
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