Posted by snoopdogMs on 1/9/12 10:12am Msg #408511
Borrower owed 137,000, lender agreed to 68,000
and forgave the difference as the home was about to foreclose. That's a chunk of change to forgive!! This was my first time to handle this kind of refi transaction. Borrower had let BF live in the house and he was supposed to be making payments. He did not. Value of home went from about 137,00 to the appraised value of 68,000. Is this the wave of the future?
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Reply by jba/fl on 1/9/12 10:21am Msg #408512
"Is this the wave of the future? "
Wow, that is a huge forgiveness. I think it could behoove many to take an offer such as this. How many will jump on this bandwagon is not coming in clearly on my crystal ball, but I see some taking advantage of this type of action.
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Reply by PegiT_MN on 1/9/12 10:39am Msg #408517
I have only encountered one refinance with a principal reduction.....and it was a large one too. These borrowers had been at a 10.5% interest rate and the home was about to go into foreclosure. Principal balance went from something like $270,000.00 to $190,000.00. Not only did the lender do the principal reduction, but they paid all the closing costs, paid all the delinquent property taxes on behalf of the borrowers......which came to about $23,000.00, and lowered their interest rate to 6%.
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Reply by ME/NJ on 1/9/12 10:36am Msg #408515
Last month senior couple sold Florida home
BOA 200k short of the loan, BOA will issue 1099 for the 200k. That is 38% tax rate hope the couple has 70+K to pay off the taxes.
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Reply by Shoshana/AZ on 1/9/12 11:18am Msg #408520
If FL is a non-recourse state, they won't have to pay. n/m
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Reply by snoopdogMs on 1/9/12 5:27pm Msg #408563
the property was in Floriday n/m
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Reply by snoopdogMs on 1/9/12 5:28pm Msg #408564
how about just Florida! not Floriday n/m
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Reply by MikeC/TX on 1/9/12 10:44pm Msg #408581
Re: If FL is a non-recourse state, they won't have to pay.
Not quite - non-recourse means they're not responsible for the balance of the debt (i.e., the bank can't get a judgment against them). What Mike was talking about was the taxes on the forgiven debt, which up until a few years ago would have been substantial. Forgiven debt on a primary residence has been exempted from taxes for several years; I think that exemption runs out at the end of this year, unless it's extended (like this Congress could ever agree to do that...).
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Reply by MikeC/TX on 1/9/12 6:09pm Msg #408566
Re: Last month senior couple sold Florida home
No taxes due - mods and short sales are exempt from taxes (through the end of this year, at least), even though the lender issues a 1099.
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Reply by ReneeK_MI on 1/9/12 4:01pm Msg #408556
HAMP mods are exempt ...
I looked it up, because I thought I remembered reading this ... I didn't dig any further, but were I facing a 1099 I sure would!
http://www.irs.gov/publications/p4681/ch01.html#en_US_2010_publink1000256843
Home Affordable Modification Program
Any Pay-for-Performance Success Payments that reduce the principal balance of your home mortgage under the Home Affordable Modification Program are not taxable.
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Reply by Susan Fischer on 1/9/12 11:02pm Msg #408584
Hooray. The inflated bubble "value" for some slickly-sold
"refi" isn't exactly "forgiven," it's more like re-leveling the playing field.
I notice it didn't qualify for the current 3+% loans available to those not upsidedown.
I see this as a good thing.
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Reply by Patricia Koch on 1/10/12 11:41am Msg #408606
Re: Hooray. The inflated bubble "value" for some slickly-sold
which bank (s) are making this wonderful gesture
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