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Tax on Principal Forgiviness

Posted in Principal Reduction, taxes

Folks underwater holding their breath Keith Harney Thanks to Seattle Times  September 13, 2014 It appears Congress will extend a tax-relief program for them, but not until after the November elections. WASHINGTON — Congress is back from its summer vacation, so the burning financial question on thousands of homeowners’ minds is this: Are you guys finally going to help consumers who are underwater on their mortgages, many of whom face crushing federal tax bills if they accept — or have already accepted — principal reductions by their lenders? This question is especially sensitive after the $16.65 billion toxic-loans settlement Bank of America and the Justice Department reached last month. Roughly $7 billion of the deal is earmarked for direct borrower relief, and a large chunk of that is expected to involve principal write-downs for underwater owners. Earlier settlements with...

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$157,105 Wells Fargo Principal Reduction

Posted in Mortgage Modification, Principal Reduction

JS is a hard working taxi driver. He came to us after a financial hardship, including a divorce. Ocwen is his servicer, however, the important fact is that Wells Fargo is the investor, the owner of his mortgage. Wells Fargo gives principal reductions because it was nailed in the recent robo-signing scandal. In this case JS is getting a principal reduction of $52,368.51 per year for three years, for a total of $157,105.53. Further, there is a principal and interest forbearance of $40,600, which means that this amount of his loan will bear no interest and require no payments for 34 years. His payment dropped from $1,936.28 to $1,074.41. Yes, JS is a happy taxi driver. See this modification by clicking on this...

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Fannie and Freddie – No Principal Reductions

Posted in Principal Reduction

The reason foreclosures will continue  By Paul McMorrow Thanks to the Boston Globe February 19, 2013 A year ago, 49 states and the federal government brought five of the country’s biggest banks to heel. They crafted a nationwide foreclosure settlement that ended a series of abuses, and committed the banks to keeping struggling homeowners off the streets. The settlement is working. But as it takes hold, it’s exposing a huge rift in the housing market. The government’s own mortgage arms, Fannie Mae and Freddie Mac, still won’t meet the same standards the big banks have committed to, and until they do, foreclosures will continue to drag on. Prior to last year’s settlement, the nation’s biggest banks greeted the foreclosure crisis with indifference. They paid lip service to the notion of helping troubled homeowners, but let homeowner assistance languish while...

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Happy Clients

Posted in Mortgage Modification, Principal Reduction, Second Mortgages

I only post a quarter of the modifications we complete, and I have not posted any of them for some time.I will get caught up on that job when we get back from our road trip vacation. But I just have to post this letter from a client regarding a modification that is just now wrapping up. This is a big, old, charming house with a view in a city north of Seattle, the kind that requires a lot of upkeep. The clients owed around $550,000 on a property with a Zillow value of $458,000. They had a 7.5% interest-only loan on the property and were paying around $3,200 per month plus taxes and insurance of around $900. The monthly payments of around $4,100 were killing them, and they had no money to pay for needed repairs. The client...

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Tax on forgiveness of mortgage debt

Posted in Bankruptcy, Principal Reduction

Current law relieves mortgage debtors from having to report forgiveness of mortgage debt through principal reduction as income – even if the mortgage debtor has gotten a discharge on the mortgage through bankruptcy. However, this law expires at the end of 2012. Unless Congress extends this law, those who receive forgiveness of mortgage debt will have to report their principal reductions as income. See IRS Publication...

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This may be the best time to modify

Posted in Principal Reduction

The five biggest lenders – Bank of America, Chase, GMAC, Citi, and Wells Fargo – have $25 billion to use giving principal reductions. If your property is worth less than what you owe on your first mortgage and if you have had a hardship, you may qualify. We have recently gotten principal reductions for our clients from Chase, Ocwen, Chase (EMC), and Wells Fargo. I do telephone consultations for no...

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Iceland forgives mortgage debt

Posted in Principal Reduction

Iceland forgives mortgage debt to save its economy by J. D. Heyes (NaturalNews) It’s probably not a concept that most U.S. banks and lawmakers want to think about, but the fact is, Iceland’s economy has grown by leaps and bounds since the government there implemented widespread debt forgiveness for many of its citizens. The initiative came about http://www.bloomberg.com ” target=”_blank”>following protests by Icelanders in 2008-2009 who were angry at the country’s leaders and bankers for its fiscal and economic collapse. At one point, protestors gathered around the Parliament building and pelted it with rocks. In the ensuing months, Iceland banks have forgiven loans equaling 13 percent of the country’s annual gross domestic product, which has eased the debt burden for more than 25 percent of Iceland’s population, according to a February report published by the Icelandic Financial Services Association....

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Principal Reductions – If House Is Underwater

Posted in Principal Reduction

HUD secretary says some homeowners received $100K+ in principal reductions By Justin T. Hilley May 8, 2012 • 12:12pm Some families living in the most deeply underwater states such as Nevada and California are receiving principal reductions exceeding $100,000 from the mortgage servicing settlement, Department of Housing and Urban Development Secretary Shaun Donovan said before the Senate Banking Committee Tuesday. The statement comes after Bank of America ($7.72 -0.24%) mailed letters to more than 200,000 mortgage borrowers for potential principal reduction under the robo-signing settlement. The bank began principal reduction in March, offering 5,000 trial modifications with more than $700 million in write-downs. “It’s not a huge number at this point, it’s in the thousands, but hundreds of thousands are now getting these letters, not just from BofA, but from all five banks,” Donovan said before the committee. In...

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Banks Lowering Principal On NegAm Loans

Posted in Principal Reduction

As millions of Americans struggle in foreclosure with little hope of relief, big banks are going to borrowers who are not even in default and cutting their debt or easing the mortgage terms, sometimes with no questions asked. Click here to read...

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Modification Guidelines

Posted in Bankruptcy, Foreclosure, Mortgage Modification, Principal Reduction

Read the Hamp Handbook here. It will answer a lot of questions. Lenders may but are not required to reduce principal balances in a modification down to 115% of the principal balance owing. Lenders may not foreclose on a borrower who is in the process of modification until after the borrower is declined and other options have been considered. A borrower in bankruptcy may proceed with a modification. Unemployed borrowers can have up to six months of reduced payments will seeking new employment. There are many other points these guidelines clarify....

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