Thanks to a spending bill signed by President Obama on Dec. 18, 2015, the Mortgage Forgiveness Debt Relief Act has been extended to Dec. 31, 2016. The extension will also retroactively cover mortgage debt that homeowners canceled in 2015.

The Mortgage Forgiveness Debt Relief Act helps homeowners avoid paying taxes on home mortgage debt that has been forgiven. In normal circumstances, any mortgage debt that has been forgiven by a lender is considered taxable income.

Initially passed in 2007, the Mortgage Forgiveness Debt Relief Act states that up to $2 million can be forgiven and not taxed if: the house has been the primary place of residence for at least two out of the last five years; or the homeowner has used the debt to add improvements and make upgrades to the home.

Unfortunately for anxious homeowners, this is not the first time that an extension of the MFDRA has come down to the wire and left them holding their breath. In 2014, President Obama didn’t sign an extension until December 29.

The good news is that this year’s extension will not only apply to short sales that took place in 2015 but also the ones that will take place in 2016. Previous extensions of the MFDRA only covered short sales from the preceding year.

There is no doubt this extension is a huge relief to homeowners who have faced financial burdens in the past few years, easing concerns that they might have had to move forward with a short sale.

Stephen K. Hachey, a Florida real estate attorney, can help your wade through this process and determine a positive solution. Contact him at 813-549-0096.

The opinions in this post are solely those of the author. The author takes full responsibility for the content. Like all blog posts, this is offered for general information purposes and does not constitute legal advice.

The housing market crash of 2007 caused millions of American homeowners to face the risk of foreclosure because of declining property values and staggeringly high unemployment rates. In 2010, a year after the worst part the crisis, the Obama administration initiated the ‘Hardest Hit Fund’ in an attempt to help homeowners who were affected the most. Today, 18 states and the District of Columbia are taking part in the program. But not all of the states are benefiting, especially Florida.

Florida Has the Lowest Rate of Approval For HHF Assistance

Unfortunately for Floridian homeowners, the state has the lowest rate of approval for assistance, one of the highest rates for denying it and a general slowness in processing the thousands of applications it receives. Of the 109,775 homeowners who applied for assistance – second only to California – only 22,400 have received it. This equates to a 20 percent rate of approval, the lowest of all the states.

When the Obama administration implemented the ‘Hardest Hit Fund’ program, it estimated that 106,000 Floridian homeowners would receive help from it. With the program scheduled to end in December of 2017 that number has plunged to just 39,000. According to a detailed report, there are several factors contributing to this.

  • Florida’s government officials failed to persuade banks and loan servicing companies to participate in the program, which the treasury relied on.
  • Florida’s government officials cut the number of months unemployed homeowners could receive help from 18 to 6 months, even though 43 percent of unemployed workers were jobless for more than six months.
  • The Treasury Department failed in pressuring the state to act accordingly.

For more information about the Hardest Hit Fund and how it might possibly help you, contact a real estate attorney today.

Stephen K. Hachey, a Florida real estate attorney, can help your wade through this process and determine a positive solution. Contact him at 813-549-0096.

The opinions in this post are solely those of the author. The author takes full responsibility for the content. Like all blog posts, this is offered for general information purposes and does not constitute legal advice.

If your home is in foreclosure and you are thinking about filing for bankruptcy, you are likely wondering if doing so will help you keep your home. The following are a few other questions to consider, as well: Will you still have to make mortgage payments after you file? Will your mortgage lender be able to foreclose on your home after your file?

Although filing for bankruptcy might be a worthwhile option to buy some more time, it likely won’t be a permanent fix to your foreclosure, unless you continue making mortgage payments. Before making a final decision to declare bankruptcy, understand what will happen to your home after filing under Chapter 7 or Chapter 13 .

What You Need to Know About a Bankruptcy Discharge

When you file for bankruptcy, you do so to obtain a discharge or relief from certain debts. With a Chapter 7, this discharge is usually granted once the time for creditors to object the filing has expired. The average time in this case is four months from the filing date. With a Chapter 13, the discharge is granted after a payment plan has been completed. The average time for Chapter 13 is three to five years. But what about liability for a mortgage debt?

Although a bankruptcy discharge of a mortgage debt eliminates your personal liability to it, a mortgage lender can still foreclose on your home if you fail to make mortgage payments. As a result, a mortgage lender can’t hold you responsible for repaying the deficiency–the difference between the unpaid mortgage debt and the foreclosure selling price) following a foreclosure.

In some states, mortgage lenders have the ability to sue homeowners for this difference and receive a deficiency judgment. However, mortgage lenders can’t receive this judgment if your mortgage debt was discharged in bankruptcy court.

Stephen K. Hachey, a Florida real estate attorney, can help your wade through this process and determine a positive solution. Contact him at 813-549-0096.

The opinions in this post are solely those of the author. The author takes full responsibility for the content. Like all blog posts, this is offered for general information purposes and does not constitute legal advice.