For those folks still holding their breath about whether the Mortgage Forgiveness Tax Relief Act (“the Act”) will be extended, there are strong signs that it will occur. On, Thursday, April 3, 2014, the Senate Finance Committee, chaired by Sen. Ron Wyden D-Or, took up the “tax extenders” issue, which includes the Act. “Tax extenders” is a fancy term for political pork served up for certain favored groups that have the ear of various politicians. But rather than being accused of doling out permanent tax breaks for special interests, these perks are created on a “temporary” basis [wink, wink], and then quietly “extended” annually ad infinitum. Continue reading “Will The Mortgage Forgiveness Act Be Extended?”
For those folks experiencing, or about to experience, a “1099 event” resulting from a short sale, deed-in-lieu-of-foreclosure or foreclosure in 2014, these are harrowing times. Will Congress extend the Mortgage Forgiveness Debt Relief Act and Debt Cancellation law (the “Forgiveness Law”)? It was enacted in 2007 so that homeowners would not be taxed on the cancellation of debt that occurs when they dispose of a home that is “underwater,” i.e. the home’s mortgage exceeds its value. Continue reading “Querin Law Update: Will The Tax Forgiveness Law Be Extended to 2014?”
Introduction. On September 2, 2013 the online Wall Street Journal carried an article that should be of interest to thousands of folks who have weathered the last five years of unpleasantness, but in the process suffered a short sale, foreclosure or perhaps a deed-in-lieu-of-foreclosure. The full article can be found here. Continue reading “New FHA Underwriting Guidelines – Good News For Former Distressed Homeowners Re-Entering The Marketplace”
Introduction. After a false start in 2012, the 2013 Oregon Legislature has just passed its “new, improved” version of what was generally known as the Mandatory Mediation Law. Besides tweaking various provisions in the prior law, SB 558 closed a loophole big enough that the Big Banks were able to drive their Foreclosure Bus through it. Until July, 2012, virtually all lenders, except Wells Fargo, were conducting their foreclosures non-judicially, i.e. outside the court room. With limited exceptions, the process, which is found in ORS 86.705 – 86.795, had been the sole method used for residential foreclosures in Oregon for the past fifty years. While lenders have always had the option to judicially foreclose Oregon homeowners who defaulted on their loans, it was rarely used. In fact, in 1959, when the trust deed law was enacted, it was the lenders that lobbied long and hard for it; they knew it was far faster and cheaper than going to court to foreclose. Continue reading “QUERIN LAW: SB 558 – Oregon’s New Mandatory Resolution Conference Law for Borrowers Facing Foreclosure (2013)”
(Disclaimer – The following post is for informational purposes only. I am not a tax lawyer or CPA. In all cases of debt cancellation, readers are strongly encouraged to seek competent advice from a tax professional familiar with their specific situation. The material below is a summary only. For specifics consult your tax advisor.)
One of the basic rules of tax law is that cancellation of debt is a taxable event. For the lay person, cancellation of debt is the same as forgiveness of debt. It makes no difference how the cancellation occurred. It could be voluntary – through a short sale or deed in lieu of foreclosure, or certain loan modifications – or involuntary – through a foreclosure. In the tax lawyer’s lexicon, “cancellation of debt” is referred to as “COD” – like the fish – just harder to swallow.
However, with the housing and credit crisis forcing many people into foreclosure and pre-foreclosure events that resulted in significant debt cancellation, the Mortgage Debt Relief Act of 2007 was enacted. Subject to certain exceptions, this law permits taxpayers to exclude taxable income arising from the discharge of debt on their principal residence. It also applies to certain loan modification events where the debt is either forgiven, or restructured in a significant manner, such that it triggers a taxable event. For many taxpayers, this new federal law was a “codsend,” if you will.
Here are some of its main features: Continue reading “QUERIN LAW: Tax on Cancellation of Debt in Distressed Housing (2013)”
This set of FAQs is a continuation of a series of Q&As based upon the most current short sale information. The link to Part One can be found here. ~ PCQ
11. Question: What is a HAFA short sale?
Answer: This government program has been around since late 2009, and was touted as one that would “streamline” the short sale process. Initially, it was intended only for borrowers coming out of unsuccessful loan mods. That does not Continue reading “2013 Short Sale FAQs [Part Two]”
Introduction. After three years of counseling folks in the throes of making a distressed housing decision, I have to honestly ask myself if loan modification today is a prudent, wise, or productive endeavor. Regrettably, in most – though not all – cases, the answer is an emphatic “No.” Of the many consumer advocates, attorneys, and counselors out there, I may be in the minority. But I suspect that of the many consumers who have gone through the modification process, I am in the majority. Continue reading “The Myth of Lender Modification”
This is the second installment of my article looking back over the past five years at Portland housing statistics. Part One examined the real reason for the housing crisis which officially commenced in 3Q 2007, and looked at the historic numbers for average and median (i.e. “mean”) sale prices according to the RMLS™. The link to Part One is here.
The Rest of the Story. Besides pricing over the past five years, what about time on the market? Available inventory? Number of listings? Closed sales? Let’s look at each one:
1. Time on the Market. Until 3Q 2007, an overheated real estate market was still burning through inventory. In August 2007, the average time on the market was 56 days – less than two months from listing to “pending sale.”[1] The following month, September, 2007, banks began realizing that the drumbeat of subprime defaults was not going away. They tightened their underwriting requirements almost immediately. Over time, they began to even restrict borrowers from tapping their HELOCs based upon ZIP code. As short sales and REOs began to fill the real estate marketplace, buyers and appraisers began viewing the sales figures as legitimate comps by which to gauge present value. All the while, many potential buyers remained on the sidelines, waiting for prices to hit bottom.[2] Many sellers who were fortunate enough to have equity during the following five years had to decide whether to wait until the market turned, or sell their home and recover far less equity than they had earlier.[3] Continue reading “Portland Metro Housing Prices – The Last Five Years [Part Two]”
Over the course of the past two and one-half years, I’ve met with hundreds of folks experiencing the trauma of dealing with huge negative equity in their homes. In lay terms, they’re “underwater” – meaning that the value of their home has dropped below what they paid, and frequently is now less than what they owe. This has become a common phenomenon over the past five years. But frequently, being underwater is not the only problem. If it were, many homeowners would likely remain where they are. However, an additional circumstance, such as one of the feared 3-Ds, Death, Divorce, and Debt, is frequently an accompanying factor that has brought homeowners to my office.
This post will focus on the Scylla and Charybdis of home ownership today: Distressed housing coupled with a distressed marriage. Here are some tips, traps, caveats, and general observations that I’ve gleaned from distressed housing clients contemplating divorce:
I. GENERAL THOUGHTS
• Don’t keep looking in the rear-view mirror – you’ll drive off the road! How and why you got here is a concern that runs a distant second to where you’re now going. In most cases, the clients I’ve met who were anticipating divorce avoided the blame-game, and wanted to make the best of a difficult situation. This is a good thing; a collaborative, realistic and rational approach to a solution is much better than an adversarial one.
• Good information can be liberating. Fear thrives best when allowed to feed on misinformation. Most people are inundated with opinions, rumors, and horror stories about the foreclosure crisis. They need to separate fact from fiction before they can make informed decisions about what to do in their own personal situation. Armed with good information, I’ve seen clients make far better choices for their mutual best interests – even when they are planning to divorce. Continue reading “Distressed Housing, Distressed Marriage”
“Language and speech are the means by which people communicate with one another. However, with the Big Banks, their silence conveys the loudest message.” [Anonymous – sort of.]
In Part One, I analyzed the recent Oregonian article, titled: “Lenders not engaging in Oregon foreclosure mediation program.” The gist of my post addressed the process under SB 1552 by which borrowers were intended to be helped under the law. However, it seems that the Big Banks are refusing to participate in a major component of SB 1552 – the part dealing with “at risk” borrowers who have applied for mediation in an effort to find a “foreclosure avoidance mechanism” such as a modification, forbearance, short sale, deed-in-lieu or some other method to avoid foreclosure. Continue reading “SB 1552 – Why Don’t The Big Banks Wanna Play? [Part Two]”
