??? Mortgage Forgiveness Debt Relief Act

[Esme56]

Hello Everyone,

As I understand it, the Mortgage Forgiveness Debt Relief Act forgives the "income" earned when debt is forgiven during foreclosure. My worry is that is says it is for years 2007, 2008, and 2009.

I am planning on just starting the walkout process and missing my first payment in March. Is it possible the bank can take too long with the foreclosure process and push it into 2010? I am worried I could be taxed heavily because my home is so far underwater. Is there anything I can do to make the bank speed up the process? (I may try for a DIL but it seems these are hard to get).

Thanks!

[ldelrosa]

Hi I read somewhere in the forum that MFDRA got extended beyone 2010... Just wait for other posts to confirm this.

[cc123]

Go to this website:
Mortgage Workouts, Now Tax-Free for Many Homeowners; Claim Relief on Newly-Revised IRS Form

towards the end of the page is:

Note: Legislation enacted in October 2008 extended this relief through 2012. Thus this relief now applies to debt forgiven in calendar years 2007 through 2012

Hope that helps. Where are you located Esme56? If you are CA, we'll be in the same timeline. We plan to miss our first payment in March.

[Esme56]

CC-

Thanks that is a big relief. I am in Calif. as well. This is very nerve racking but I am relieved I am finally doing something.

Do you know anything about any state tax implications? I can't find any info on the web.

[cc123]

Hi Esme56,

We got a tax and real estate lawyer to go through all our question and concerns. We wrote all our questions on paper and then faxed it to him together with our loan documents. He reviewed everything and we did the consulting over the phone. It was worth the $150 we spent as it helps clarify a lot of things. After talking to him, we found out that our situation is pretty clear cut. He told us not to sign any lenders documents unless we run them through a lawyer.

[brista26]

I to was concerned about my house not foreclosing very quick I live in AZ and have a loan through wells fargo I missed my first payment and my house is already going to auction MAy12, 2009 My house lost over $100,000 in value. I am glad to hear that the act extended though. ALso I was wondering if anyone on here knows if banks will take away your debit card after having a foreclosure? Some of my charge cards have been lowered or cancelled but I am concerned about my debit card. Just wondering if anyone has any info?

[brista26]

I missed my first payment in october of 08 sorry forgot to type that