Help For Underwater Mortgages Coming to EndBlog, Buying, Real Estate News
Earlier this year, President Obama signed a one year extension to the law known as the Mortgage Debt Relief Act, which was intended to help homeowners faced with an underwater mortgage. These toxic loans resulted from the housing crisis of the last few years. These homeowners typically owe more on the mortgage than the house is worth on the market. Even though we are seeing a significant percentage of owners elevated from this situation with the escalating home prices this year. For many the fact remains if they sold the property, they would still owe money to the lender. Many owners are working with their lenders to adjust the mortgage to reflect the property’s current market value. Before the relief law was passed in 2007, the IRS treated the amount of the mortgage forgiven or written off by a lender as income for the owner. Under the current law, qualified homeowners can avoid that problem. The applies to only primary residences, and the amount is limited to $2 million. If you think you might qualify, consult your real estate advisor and a tax professional before filing the paperwork. This program is only being made available until the end of the year and will not be extended any further, so act now or forever hold your peace.