Some individuals may be subject to capital gains when they sell their homes via a short sale, they'll need to check with their CPAs.
Many people re-fi'ed and used the cash for other things. Only purchase money loans, or loans to re-model or rehab will qualify. So if an owner bought a bunch of toys, they are going to be exempt from this act.
See link below.
If the seller (Lender) receives the insured proceeds from the overcollateralization for any short fall NO WAY!
(See CPA) Same with a modifcation - Under section I of the code subject to modifcations the IRS revenue procedure it describes the conditions under which modifications to certain subprime mortgage loans will not cause the Internal Revenue Service (Service) to challenge the tax status of certain securitization vehicles that hold the loans or to assert that those modifications create a liability for tax on a prohibited transaction.
The purpose of the revenue procedure is to provide certainty in the current economic environment with respect to certain potential tax issues that may be implicated by fast track loan modifications, as described below. No inference should be drawn about whether similar consequences would obtain if a transaction falls outside the limited scope of this revenue procedure. Furthermore, there should be no inference that, in the absence of this revenue procedure, transactions within its scope would have impaired the tax status of securitization vehicles or would have created liability for tax on a prohibited transaction.
Rev. Proc. 2007-72, 2007-52 I.R.B. 1257, provided similar guidance regarding fast-track loan modifications that were effected in a manner consistent with certain principles, recommendations, and guidelines (the â€œOriginal Frameworkâ€), which the American Securitization Forum (â€œASFâ€) released on December 6, 2007. In July 2008, the ASF released an updated Framework, which covers additional fast-track loan modifications.
This revenue procedure amplifies and supersedes Rev. Proc. 2007-72 by extending its provisions to these additional loan modifications.
Contact your tax representative to get more information
Century 21 My Real Estate Co.