Two foreclosures CA GMAC/ Litton Loan, NV ASC

[Andrew80]

I decided to give this forum a try after I found this website a couple days ago and a link from foreclosure related news article.

I currently have two separate homes in foreclosure.

Home 1
Sunnyvale CA Purchased Nov 2005 $693,000 100% financing including $10k from seller for closing costs.
Payments $4400 not including taxes or insurance. 1st loan GMAC 6.99% 2nd Litton 9.99%
Now on the market for $515,000.
1st loan 2 year ARM reset to 9.99% in Dec 07 to $6500, never paid a $6500 payment. Last payments made in Nov 07.
Tried to negotiate with GMAC/ Litton to no avail.
Paid on time for two years, waited to refi because of prepayment penalty. Tried to refi twice but value too low.
Moved out in Feb to a house double the size in a way nicer community for $2200 a month rent. I will miss the tax deductions from the interest loan.


Home 2
Las Vegas NV Purchased Feb 2006 $409,500. 100% financing. Payments $3300 not including taxes or insurance. Rented for $1350. Stopped paying Jan 08.
Homes now selling for $200,000 - $250,000.
In foreclosure but working on getting a realtor for short sale. If no short sale then walking away.

Not too worried about Home 1 because I was told that the difference of sale price is not taxed.

Worried about having to eventually pay the taxes on the difference on the Las Vegas home. Not looking forward to paying the $200,000 worth of taxable income for debt forgiveness.

Looking for ideas, suggestions, tips. Any good reasons to keep homes that are worth so much less.

Thanks

Andrew

[Moe Bedard]

Welcome to Loan Safe!

I decided to give this forum a try after I found this website a couple days ago and a link from foreclosure related news article.

I currently have two separate homes in foreclosure.

Worried about having to eventually pay the taxes on the difference on the Las Vegas home. Not looking forward to paying the $200,000 worth of taxable income for debt forgiveness.

It looks like you do not qualify for the mortgage debt relief act Mortgage Workouts, Now Tax-Free for Many Homeowners; Claim Relief on Newly-Revised IRS Form . This is really a subject that will be huge over the next few years.

I take it your making a business decision here and you have assets and income that you are worried about. I don't blame you, but this is one of those wait and we will see what happen things. This has never ever happened on this grand of a scale in our economy. You are a pioneer of sorts. A beta test.

You really need to speak with an attorney about this, but, what are they going to say???? I have yet to find and attorney that has a solution or remedy to your situation.

Sorry, I wish I could be more help. Best of luck.

[Andrew80]

Hello Moe,

Thanks for the reply. I have been learning something new everyday about mortgages, foreclosure, and short sales. Often things I read contradict what I read the day before. I agree that “this is one of those wait and we will see what happen things.”

I read through the link on Mortgage workouts and I have a couple of questions.

-Will the difference on the short sale of my primary residence be tax-free?

-Is a short sale considered a mortgage restructuring?

The IRS article mentions

“The new law applies to debt forgiven in 2007, 2008 or 2009. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, may qualify for this relief.”

-Why is chapter 13 mentioned so much when talking about foreclosure?


Andrew

[Andrew80]

Just talked to my tax guy.

The first home, my primary home, will be covered up to $250,000 worth of tax forgiveness.

The second home, a rental in LV, will not be covered. I face an estimated $300,000 worth of additional taxable income based on my purchase price $409k, current selling prices $200k- $250k, depreciation claimed on the property, income from renter for this year.

Now I am faced with the possiblity of trying to save a foreclosured home worth half of what I purchased it for.