Fremont, California (EastBayDaily) — According to the Internal Revenue Service, the Mortgage Debt Relief Act, which originally passed in 2007, enables a borrower who either obtained a loan modification or opted for a short sale (a sale of a property for less than what’s owed) to be exempt from realizing the forgiven amount as taxable income.
“The extension of this law really was a necessary part of the real estate recovery we are now seeing all over the country. Whether selling a home or if one is “lucky” enough to obtain an affordable loan modification, the law served as a counter weight to the foreclosure epidemic we have witnessed since 2007.” Said Charles Lassey Founder of ACL Real Estate and Property Management, a Northern California Full Service Brokerage Firm that specializes in Short Sales and Property Management.
In that study, it was found that the new extension probably wouldn't contribute to a new onslaught of delinquent mortgages in the first half of 2013.
Many opponents who took issue to the law mentioned that it will reward people who strategically stopped paying their mortgages in hope for aid from their banks and or servicers. ACLRealEstate.com disagrees when it comes to loan modifications, because many of the programs that exist today apply only to loans that were originated from 2010 and prior, with the bulk of assistance going to borrowers whose loans originated from 2008 and prior.
Encouraging homeowners to complete a short sale is where the market seem to be headed. For the next 24- 36 months, a short sale will be the traditional sales in many areas of the country. This law makes gives homeowner one extra incentive not to go through foreclosure.
ACL Real Estate and Property Management
ACL Real Estate
CA DRE# 01893837