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2 Year Extension of the Mortgage Debt Relief Act passes a Senate Committee

The Senate Finance Committee passed a two year extension of the Mortgage Debt Relief Act.  It will be retroactive to 1-1-14.   So short selling homeowners whose closings occurred during the first four months of 2014 have a greater hope of not needing to use one of the “work-arounds” we’ve talked about in other blog entries, such as proving insolvency under IRS guidelines or recasting the short sale property as income producing versus a primary residence.  Many people in the situation of closing a short sale in 2014 still gain a great deal of peace by doing advanced planning with a tax professional and discussing possible Plans B.

Many Congressional experts are confounded by why the extension is taking so long to accomplish even though it has wide-spread bipartisan support.   Apparently, the devil is in the details and skirmishes remain on some of the less well known provisions.   I suspect there may also be some thought on both sides of the isle as to how to add riders or other baggage to the MDRA to turn the extension into a more partisan looking victory.

One irony of the delay in passing the Extension, and the retroactive application is that it may have a very short life by the time the Extension passes the full Senate and House of Representatives.   If you are a seller who has been waiting for the right time to list your upside down house in a short sale,  implement your listing and move forward soon!  Both foreclosures and shadow inventory are down significantly.   CoreLogic reports that :

Shadow Inventory at Lowest Level Since August 2008.

So the seller with a home that is “underwater” or has “negative equity”, will have less competition from homes on the market from foreclosure as well as homes already repossessed by lenders and held as “REO”.   Shadow Inventory has suppressed market value but may have figured even more as a psychological deterrent to listings.   But if you are a seller needing or planning to move in the next 18 months, don’t let the fear of the unknown prevent you from getting your home on the market soon.    Many people who waited until the fall of 2013 to list were unable to close by the end of the year and were met with that unpleasant tax news in 2014 that the MDRA had expired.   Allow yourself plenty of time to sell you house before the next likely expiration of the act in 12-2015.  Also, given the fact that most of your closing fees to sell your short sale are paid by your lender, it makes no sense whatsoever to use “lay short sale services” or “lay negotiators”.    These SSNs are often inhouse employees or additional profit centers for other professionals in the sale of your home such as real estate brokerages and are not legal experts nor can they practice law on your behalf or represent you under the laws of the Commonwealth of Virginia.    The choice of Short Sale Negotiators is always YOURS as the Consumer.  So if the cost to you is the same, or even if it is slightly higher, why choose the the SSN who merely acts as  a passive conduit of your personal and financial information?   Insist on professional accountability and chose a negotiator that is a licensed law practice and actually represents you and has an ethical duty to do so with zeal and  proactivity!


Mortgage debt relief extension closer to reality

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The Senate Finance Committee has passed a two-year retroactive extension of a law that allowed homeowners to avoid being taxed on debt forgiven in a short sale or through a principal reduction, Realtor Magazine reported.

The extension still needs to be passed by the full Senate and by the House of Representatives. The federal Mortgage Forgiveness Debt Relief Act of 2007 expired on Dec. 31, 2013, despite strong bipartisan support.

In addition to mortgage debt relief, there are some promising signs that Congress may pass extensions of other popular housing-related tax benefits sometime this spring, including write-offs for energy-saving improvements and mortgage insurance premiums.

– See more at: http://www.inman.com/wire/mortgage-debt-relief-extension-closer-to-reality/#sthash.Fy5RekzA.dpuf

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