Posts Tagged ‘1099-c’
Short Sales, Florida Realtors and Massive Liability For Consumers!
Author: Matthew D. Weidner, Esq.
Finally The Answer to The Question, “Why Won’t Banks Modify Mortgages, Accept Short Sales or Work With Homeowners?”
Author: Matthew D. Weidner, Esq.
I have more than one million dollars in potential short sale transactions sitting on my desk. The combined total of the deals, if we could get the banks to accept them, would net the assorted banks $1 million dollars on total principal balances of around $1.6 million dollars.
I represent a few hundred homeowners who are in foreclosure and who want nothing more to negotiate a fair and reasonable modification with the lenders.
But the banks are not accepting even the most reasonable short sale offers and they are refusing to offer deserving homeowners modification of their mortgage, much less anything reasonable .
My experience is not unique. Every professional or consumer reports the same frustration and always we find ourselves asking….
“what do the banks want….they’re not going to get anything better than this short sale or modification
….what gives?”
As the article from today’s Wall Street Journal reports, (full article here) what gives is the federal government. What gives is tax payer dollars. What gives is more massive handouts to the very institutions that caused all the problems we find ourselves in. More specifically, JPMorgan, Washington Mutual and the other major banks are set to get massive tax rebates…
J.P. Morgan in Talks for $1.4 Billion; Stimulus Gives $12 Billion to 250 Firms
So there’s the answer to the question, “why don’t the banks want to deal?” Rather than get dribs and drabs of short sales and modifications from homeowners, they can show losses related to those homeowner debts then get those “losses” offset in the form of bajillion dollars in tax rebates from the endless supply of “free” money being handed out by the federal government.
So now we know at least part of the reason….like the details of the problems that led to the crash…we’ll find out more later, but the simple explanation is the fat cat bankers and the federal policy makers are handing out much bigger checks than the measly little short sale closing checks they’d get or the mortgage payments from borrowers……
Foreclosure Short Sales In Florida And a Borrorwer’s Continuing Liability
Author: Matthew D. Weidner, Esq.
In an article I am quoted in today’s St. Petersburg Times, reporter James Thorner writes about an issue I’ve been voicing concerns about for some time now (read back in the blog). As indicated in the article, my primary concern is that homeowners in foreclosure are often approached by realtors or other parties who suggest that a “short sale” of their home is the answer to the problem and that if the sale only closes, their problems are over forever. This unfortunately is not that case–the borrower still faces several significant liabilities (like 1099-c IRS liability) and unless they are properly represented by an experienced real estate attorney, they may not be accurately advised of the consequences.
Read the article and don’t get trapped, consult an experienced real estate attorney www.mattweidnerlaw.com
Short Sales, Deed In Lieu and 1099-C Tax Liability
Author: Matthew D. Weidner, Esq.
A critical question affecting homeowners who are caught in a foreclosure problem is whether they will face 1099-c tax liablity from the IRS. In short, if the lender has a mortgage on your home for $200,000 and the home is sold in foreclosure and the bank only recieves $100,000, the lender will issue to the borrower and the IRS a 1099-C Notice of Debt forgiveness. In some circumstances, the borrower would owe the IRS their maximum tax rate on that amount, so if a homeowner were is a 28% tax bracket, she could face a $28,000 tax liability. Given the serious financial consequences of this issue, it is critically important that any borrower engaged in a short sale, deed in lieu or other transaction understand the specifics involved in these transactions.
Each fact situation is different and there are ways to reduce or eliminate the tax liability entirely for the homeowner, but all of this must be taken into consideration prior to agreeing to any transaction. The general rule is that homeowners may not face liability when the transaction relates to their homestead or primary residence, but the homeowner may face liablility when the property is a second home or investment property.
Having said that, each situation and the rules that apply are complex. For advice on your specific situation, contact Matt Weidner at www.mattweidnerlaw.com!
