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Helena Gentile's Blog

By Helena Gentile | Agent in Massapequa, NY
  • Tax issues with short sales and foreclosures

    Posted Under: Home Buying in New York, Foreclosure in New York, Investment Properties in New York  |  October 3, 2013 10:13 AM  |  186 views  |  No comments


    Remember the Mortgage Relief Debt Act?  That is the law that allowed families who engaged in a loan modification, short sale, or foreclosure to be excluded from having to pay income taxes on the amount of the mortgage debt forgiven by the bank.


    Well, this law ends on December 31, 2013.  That means that beginning on December 31, 2013 any homeowner who is involved in a loan modification, short sale, or foreclosure where any portion of the mortgage debt is forgiven will have to pay income taxes on the amount that was forgiven.


    Congress introduced a bill to extend this law for another year, but the likelihood of this passing before the end of the year may be slim. 


    Therefore, it is recommended that you try to close on these types of sales prior to the deadline of December 31, 2013 in case Congress does not extend this law.


    All agents should advise the buyer who's in contract to contact THEIR accountant about these possible tax issues.

  • Short Sale Incentive Update...

    Posted Under: Home Selling in New York, Agent2Agent in New York, Foreclosure in New York  |  April 10, 2013 10:28 AM  |  380 views  |  1 comment

    Hello Agents,

    Yes, it’s true. Many banks are now offering cash to sellers for doing a short sale on their home, which will make it easier for you to list short sales.

    This can be one of your best tools to get the listing...an incentive check for the sellers! When pursuing listing a short sale you should make sellers aware that they may be eligible.

    Below is an overview of the major incentive programs:

    1. FHA Pre-Foreclosure Sale Program: $750 - $1,000. If the loan is FHA-insured and the short sale is approved, HUD will pay the borrower between $750 and $1,000 towards relocation costs.
    2. VA Compromise Sale Program: up to $1,500. If the loan is VA-insured, VA will pay $1500 in relocation assistance to borrowers who complete a short sale with a VA compromise claim.
    3. HAFA: up to $3,000. Short sales that are processed through the federal government’s HAFA program allow the servicer to pay a $3,000 cash relocation incentive to the seller. This payout is then reimbursed to the bank by the US Treasury. If the home is not owner-occupied, the payment goes to the occupant. The incentive is not paid if the home is unoccupied.
    4. Fannie Mae, Freddie Mac, FHFA “Standard Short Sale” Program: up to $3,000. This program replaces the HAFA program if the investor is Freddie Mac or Fannie Mae. It offers up $3,000 in relocation costs to the borrower, but this amount is a maximum total relocation cost.
    5. Bank of America: Cash incentives to borrowers range from $2,500 to $30,000, and are offered at the discretion of Bank of America or the other bank. Any delay in documents or non-cooperation from either party may jeapordize the cash incentives.
    6. Wells Fargo: Cash incentives can range from $3,000 to $20,000 and are offered at Wells Fargo’s discretion.
    7. Chase: Cash incentives of up to $35,000 have been offered to select homeowners by invitation from Chase.
  • New Information Regarding the Mortgage Forgiveness Act

    Posted Under: Home Selling in New York, Agent2Agent in New York, Foreclosure in New York  |  January 3, 2013 6:33 AM  |  347 views  |  No comments
    Had to share this from attorney Peter Goodman... Great updated information regarding short sales and what it means to the homeowner...

    Good morning and Happy New Year!

    I hope everyone had a nice holiday and is ready for 2013. I am optimistic about shortsale transactions this year as new non GSE HAFA shortsale policies take effect on February 1, 2013 that will require servicers to make decisions on borrower qualifications for eligibility within 30 days; will allow for pre-determined hardships for borrowers delinquent more than 90 days and with a FICO score less than 620; pays tenants up to $3,000 for relocation assistance, and incorporates other important changes. As you may know, Fannie Mae and Freddie Mac are changing their shortsale guidelines for 2013 as well and their current HAFA program guidelines are now expired (more on this in another post).

    The most anticipated recent development is that the Debt Relief Act of 2007 has been extended until January 1, 2014. Many of you have been asking me about this issue and have been concerned that the failure to extend the act would significantly hurt shortsales and housing. Therefore, I am happy to state that the Act has been extended. Please see the below article for more information on the Act’s extension as well as additional tax benefits that have been extended to help homeowners and the housing market as a whole. Enjoy!

    Mortgage industry fares well in fiscal cliff deal, debt forgiveness law survives



    Kerri Ann Panchuk [1]

    Main Image:

    shutterstock_112645772.jpg [2]

    The fiscal cliff deal preserves the Mortgage Forgiveness Debt Relief Act, while also bringing back a popular tax break on mortgage insurance premiums.

    The mortgage industry can breath a sigh of relief with the final fiscal cliff deal bringing back a popular tax break on mortgage insurance premiums and debt forgiveness for borrowers who go through a short-sale or some other type of debt reduction.

    A topic that is still up for discussion and likely to surface later in the year is whether the popular mortgage interest tax deduction will be part of a long-term deficit reduction plan.

    Still, the deal passed by the Senate and House on Jan. 1 is one that leaves room for hope in the housing market.

    The American Taxpayer Relief Act of 2012 apparently extends a law that expired at the end of 2011, which allowed for the deductibility of mortgage insurance premiums, according to a research report from Isaac Boltansky with Compass Point Research & Trading. The law now applies to fiscal years 2012 and 2013.

    "The law dictates that eligible borrowers who itemize their federal tax returns and have an adjusted gross income (AGI) of less than $100,000 per year can deduct 100% of their annual mortgage insurance premiums," Compass Point said.

    "Certain borrowers with AGIs above $100,000 may benefit from the deductibility as well but are subject to a sliding scale. The tax break covers private mortgage insurance as well as mortgage insurance provided by the FHA, the VA, and the Rural Housing Service. In 2009, about 3.6 million taxpayers claimed the mortgage insurance deduction," the research firm added.

    One of the more watched provisions of the fiscal cliff was the Mortgage Forgiveness Debt Relief Act of 2007, which was set to expire on Dec. 31.

    The fiscal cliff deal extends it for another year, meaning homeowners who experience a debt reduction through mortgage principal forgiveness or a short sale are exempt from being taxed on the forgiven amount.

    "The amount extends up to $2 million of debt forgiven on the homeowner's principal residence," Compass Point Research & Trading said. "For homeowner's to qualify, their debt must have been used to 'buy, build, or substantially improve' their principal residence and be secured by that residence. The law, which was passed in 2007 with a 5-year sunset provision, will now be in effect until Jan. 1, 2014."

    Another minor win for housing is a provision tied to the government's plan to increase the capital gains tax rate from 15% to 20% for individuals who earn more than $400,000. While in theory, this is harder on higher-income homeowners, Compass Point sees a silver lining through an exclusion.

    Compass Point notes the law "states that only gains of more than $250,000 for individuals ($500k for households) are subject to taxes on the excess portion of capital gains. Point being, in order for an individual homeowner to be impacted by the increased capital gains tax rate they would need to have an adjusted gross income above $400,000 and gain more than $250,000 from the sale of the property. Since this exclusion threshold remained intact, the impact of the capital gains tax increase is limited."

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