Two Bits of Good News

Well, today brings us a couple of items to help you out. One relates to foreclosure review rights, and the other proposes to extend the period available to do a short sale without owing the IRS a bundle as well.
In the former item, consumers who feel they have been wronged by the foreclosure process have had the opportunity to have federal reviewers examine their individual situations to see if errors were made, and if, because of those errors, the homeowners have suffered financially. This process has a deadline, but the Federal Reserve and Office of the Controller of the Currency (OCC) have jointly announced an extension of the deadline. Under this announcement, homeowners now have until July 31, 2012 to request such a review of their cases. This covers perceived errors in 2009 or 2010. A large number of servicers have agreed to participate in the program. If you want more info, check with your lender or servicer, or, failing any help there, talk with the Fed or the OCC.

The latter bit of good news relates to short sales. Under existing tax law, short sales can create a tax obligation for the seller as tax codes stipulate that forgiveness of debt is taxable income in the year forgiven. However, in order to reduce the additional burden of homeowners having to pay income tax on the amount forgiven, in addition to having to sell their homes to get out from under, Congress previously passed an exception to this part of the tax code, depending on when the mortgage debt was incurred. This was called the Mortgage Forgiveness Debt Relief Act of 2007. Now, President Obama has proposed as a part of his 2013 budget an extension of this exception. The proposed extension would forgive any tax obligation on forgiven debt that occurred any time before January 1, 2015. Also, the Government would be allowed to periodically reassess the market and make further extensions as it then felt necessary. Now, this is just a proposal. It will certainly be one of the many items negotiated over and discussed ad infinitum as part of the final budget, and that will likely take months. However, this is one of those situations when a call, letter or email to your Congressman and Senators would be a good idea.
Good Luck!