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(English) Will Mortgage Forgiveness Debt Relief Act Be Extended?

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25 comentarios
  1. Gloria Gomez Matthews
    Gloria Gomez Matthews Dice:

    Of course it should be extended!   Why should they be further penalized for paying taxes on income they didnt make OR create… that was bubble money, and the bubble just doesnt exist anymore… so why would the government expect us to pay tax on it….???

    Aaaah by paying it out, on a 1099, to the poor homeowner, it looks like an operating expense for the banks instead of BAD DEBT.

    We could always reclassify how the BANKS record it, as a capital loss, and NOT ISSUE THE 1099.   OOOH that wont work.

    just my viewpoint……..

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    • Stephen Phillippo
      Stephen Phillippo Dice:

      Because they took a loan out for $350k or something and could only pay $200k of it back. They actually got the money. It’s not the banks fault it was a bad deal because people can’t wait or find good deals. They got the money from the bank to buy the deal they wanted. They didn’t pay the money back. So it’s income. Income is taxed.  I find a killer deal on a home or car and people are amazed. Well its’ because I do research and marketing. Not because I fell in love with something that is probably beyond my means in the long run if I lost a job or whatever. That’s why I laugh at people like that. Suckers.

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      • Bill Richardson
        Bill Richardson Dice:

        Your reasoning completely ignores the fact that market values FELL, thus making what might have been a “killer deal” at the time the worst deal possible.  

        Let’s say I purchased a home that appraised for $400K at a deal of $320K.  By your reasoning, you should be praising me for finding a super deal – 20% off appraisal.  So then, let’s say that I put a further 20% down on the house, and took out a mortgage for $256K.  Great!  I’ve got a house that’s valued at $400K, and I only have a mortgage for $256K!But then, the market tanks, the value of the home drops to $180K, and suddenly, I have a mortgage for $256K, but the house is only worth $180K. So – I can’t sell it, I can’t refinance it to get a better rate.  Still, I’m making the payments, because I made certain that I COULD make the mortgage payments on $256K.Then, the death blow occurs.  I lose my job, or worse yet, someone in my family gets really sick – and I can’t make my payments.  Still, I can’t refinance… so I’m stuck with payments I can’t make.  The banks “say” they’ll do loan mods – but that just ain’t happening (ok, a “few” people are able to get it, but only a few).  So – what do I do?I only have one option, and that is to let the house go to foreclosure.  So, now I lose my home, and then suddenly, PURELY BECAUSE OF THE BAD SPECULATION ON THE PART OF THE BANKS, I get hit with a tax bill because the banks lent me money and then devalued the asset.  

        Your reasoning would be valid IF this weren’t a systemic issue.  IF it were on a case by case basis, then yes, the idea of sustaining a loss on an individual investment and paying taxes on the excess loan (now converted to income) would be “fair”.

        But, this is a SYSTEM problem, caused COMPLETELY by the banks, who 1) lent to people who couldn’t really afford it in a MASSIVE way, and 2) Further aggravated the issue by packaging what they knew to be “Bad Debt” and selling to unsuspecting investors.

        You can blame the individuals for buying a home that they knew they couldn’t afford – but that’s too simplistic.  Most folks are, at best, only a few months away from not being able to afford their home – no matter HOW good of a deal they got – if they rely at all on job income to pay that mortgage!

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      • Terrin Bell
        Terrin Bell Dice:

        The problem with your logic is 1) corporations, which are treated like people under the law, would be allowed to claim the same foreclosure as a business loss and not pay taxes on the loss but instead receive a deduction, and 2) under general principles of contact law one party to a contract is not allowed to undermine the value received to the other party. Yet that is exactly what the banks did. They undermined the value of borrowers investments by giving loans out to people who were risky investments thereby eventually causing the whole market tank. Moreover, people have been told since the beginning of our Country that buying a home is an investment because the value always goes up. If it is an investment, a loss should be treated as a deduction on a tax return. 

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  2. Stephen Phillippo
    Stephen Phillippo Dice:

    It would be like making income on stocks in the year 1995 and paid taxes on that income. (home purchases 1995 lets say.) Then they sold the stock at a loss in 2012. They don’t get a rebate of the loss. The same as a home loan. Buying and selling something. They surely would want the PROFIT on it the house prices went up. But when they go down they aren’t prepared for the loss. Or the INCOME generated from the money they got to borrow. They got that money without paying taxes on it and bought an item they wanted. They could have paid the money back but didn’t. They didn’t pay the money back on it. It’s income then. Income is taxed.

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    • Bill Richardson
      Bill Richardson Dice:

      Spoken like someone who has never actually traded stocks (if you have, you certainly didn’t pay attention to how the taxes work out).

      You only have a taxable event when you sell stock.  So, if you bought a stock in 1995 and sold it for a profit, then when you sold it, you paid taxes on it.

      If you then sold the stock at a loss in 2012, you would have to had PURCHASED it again prior to that (as you already sold it in 1995).  So, let’s say you bought it again in 1995 at a high rate (right after you had made the initial profit), and sold it in 2012 at a low rate, thus generating a loss.  YOU ABSOLUTELY get to take that capital LOSS on your taxes – although you can only take up to $3000 worth of loss a year.  So, if you lost $30K, you’ll be taking losses for 10 years.

      So, your example has NOTHING to do with the scenario of being taxed on the difference between a home loan and the underlying value of the asset.  I’m really not sure WHAT you were trying to say here.

      In addition, you keep maintaining that “they could have paid the money back but didn’t”.  That’s simply not true, and if you’ll look at my reply to my previous post, you’ll hopefully see why.

      Things are rarely as black and white as you seem to need to make them out to be.  I’m glad that you were able to purchase a home at a good price, and that you are still able to make payments on it.  There are MANY folks out there in the same situation as you.  There are still MANY MORE who are not.

      I wonder if you would be so cavalier about the tax implications of home foreclosure if you were to suddenly lose your source(s) of income and were no longer able to service your debt?

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    • Terrin Bell
      Terrin Bell Dice:

      It is not the same. If I buy a stock and it losses money I get to claim the loss and get a deduction on my tax return. This is even though I took a risk.  Moreover, if a business borrows money, buys real estate, losses the property to foreclosure, the business gets to claim the loss as a deduction on its tax return. 

      The IRS is treating a home as personal property, but this doesn’t comply with the message the government and professionals have given people for years. Namely, a home is an investment. If it is in fact an investment, investments are taxed only when they go up in value, and losses are deducted from income. 

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    • David Eckert
      David Eckert Dice:

      Your point that income is taxed is not entirely true. Rental income is often not taxed if it is offset by depreciation. Certain types of income are often not taxed and the tax code permits this. I believe that the issue at hand is not whether or not something is fair or not, but what is better for the economy in the long run. Making it easier to recapitalize an asset that is upside down in value relative to its loan is the goal of the mortgage relief act. It is a good idea. It keeps people in their homes if they are able to successfully negotiate a note modification and it speeds up the process for someone trying to negotiate a short sale. This is good for our economy.

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  3. GT2012
    GT2012 Dice:

    All I can say is everyone please take a bit of time out of your day and watch The Last Days Lehman Brothers. It will piss a lot of you off and if you are a banker and you know who you are it may please you. Either way, it is certainly worth watching and surely everyone can spare 59:05 minutes for this excellent documentary. Check it out my fellow Americans: http://www.ovguide.com/tv/the_last_days_of_lehman_brothers.htm

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  4. George Vessell
    George Vessell Dice:

    Don’t be sorry for fighting for our country! Most Americans appreciate your service and sacrifices. I am a DAV who has been fighting Beneficial/HFC for 5 years now since refusing to make anymore payments in May 2007 because of fraud by the lender. We are still in our home fighting a foreclosure for 5 years, without a lawyer. You’re right – the banks don’t care about Vets. The courts don’t either! The foreclosure judge denied us protection under the Servicemember Civil Relief Act when my wife was activated from reserve status and sent overseas. People should keep their mouths shut when they don’t know what they’re talking about. Your situation is another example proving that many of the MILLIONS of people in foreclosure are not “responsible for where they are in life because of poor choices they have made’. That seems to be the message of conservatives. Best wishes to you and THANK YOU for your service!!!!!!!

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  2. […] Will Mortgage Forgiveness Debt Relief Act Be Extended? There is a chance that the act will be extended till 2015 based on Obama's FY2013 budget proposal. […]

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