Mortgage Workout Options for Distressed Homeowners
Tired of leaving unanswered messages with your mortgage lender? The U.S. Department of Housing and Urban Development has set up a free hotline (877 HUD 1515) staffed by HUD approved counselors to help struggling homeowners who are looking at a reset situation on an existing mortgage, are three to six months from defaulting or are in the midst of health and employment issues.
Despite the establishment of last September's California State Law SB 1137, in which lenders have been blocked from starting foreclosure proceedings until 30 days after contacting or reasonably attempting to contact the borrower, thousands and thousands of people are still trying to figure out how to obtain the financial relief they need to keep hold of their homes.
"Although not every lender is willing to negotiate a recasting deal, many are prepared to make mortgage modifications as the existing lender for reduced payments recalculated on the original interest rate with a new maturity date," says Timo. To find out more about these tax obligations see www.irs.gov.
"Otherwise, homeowners who are struggling may be looking at a short sale, or a payoff coming in at a lower amount than what was originally negotiated on the loan. This option avoids foreclosure, but here in California, it most likely will trigger off additional tax obligations on debt forgiveness, which is seen as a taxable income."
The final option for distressed homeowners is Foreclosure, the ultimate loss of homeowner rights so that the bank may sell the property to cover the debt. This can also lead to tax obligations, is detrimental to credit rating and can impact your ability to rent or purchase another property.
"Anyone considering foreclosure should take the time to consult with an experienced accountant and/or tax attorney," says Timo. "To avoid finding yourself in this position, start the ball rolling by calling the HUD hotline at the first sign of financial distress."
Despite the establishment of last September's California State Law SB 1137, in which lenders have been blocked from starting foreclosure proceedings until 30 days after contacting or reasonably attempting to contact the borrower, thousands and thousands of people are still trying to figure out how to obtain the financial relief they need to keep hold of their homes.
"Although not every lender is willing to negotiate a recasting deal, many are prepared to make mortgage modifications as the existing lender for reduced payments recalculated on the original interest rate with a new maturity date," says Timo. To find out more about these tax obligations see www.irs.gov.
"Otherwise, homeowners who are struggling may be looking at a short sale, or a payoff coming in at a lower amount than what was originally negotiated on the loan. This option avoids foreclosure, but here in California, it most likely will trigger off additional tax obligations on debt forgiveness, which is seen as a taxable income."
The final option for distressed homeowners is Foreclosure, the ultimate loss of homeowner rights so that the bank may sell the property to cover the debt. This can also lead to tax obligations, is detrimental to credit rating and can impact your ability to rent or purchase another property.
"Anyone considering foreclosure should take the time to consult with an experienced accountant and/or tax attorney," says Timo. "To avoid finding yourself in this position, start the ball rolling by calling the HUD hotline at the first sign of financial distress."
