Michael D Wyckoff

MY HOUSE IS GONE, BUT MY DEBT LIVES ON. You should not let this happen to you. Recent data is revealing that lenders are pursuing more defaulted homeowners for deficiency judgments. Under Florida law, if your house goes to foreclosure and is sold by the Clerk of the Court, the homeowner remains responsible for the difference between what the fair market value of the home was on the date of the foreclosure sale and what the homeowner owed on the mortgage(s) on the home at the date of the sale. This amount is referred to as the deficiency.

If one lets his home go to a foreclosure sale without trying to avoid foreclosure by attempting to, for example, short sell the home, then he has subjected himself to being pursued by the lender for the deficiency amount described above after the foreclose sale occurs. In other words, the homeowner has lost the home to either the bank or the successful bidder at the foreclosure sale, yet he still remains liable for the deficiency amount.

By pursuing an alternative to foreclosure, such as a short sale, the homeowner with the advise and help of his lawyer can seek to have the lender waive their right to a deficiency (which remember is granted to them under Florida law) in exchange for cooperating with the lender, the Realtors, the buyers and others to sell the home through the short sale method.

Do not let this happen to you. At the moment you are thinking about missing your mortgage payments, seek the advise of a lawyer who is experienced in foreclosure avoidance options.

http://www.wyckofflawfirm.com/

IMPORTANT! THE MORTGAGE DEBT FORGIVENESS DEBT RELIEF ACT SUNSETS AT THE END OF NEXT YEAR

If you have prospective clients who owe more on their primary residence mortgage(s) than their home is worth, it is probably a good idea to inform them that the law currently in effect that is very good for them financially expires in little more than a year from now.

As a general rule, the IRC treats the amount of canceled/forgiven debt as ordinary income to the taxpayer. Congress, however, enacted The Mortgage Debt Relief Act of 2007 which generally allows a home owner to exclude as income a cancellation/forgiveness of debt on their primary residence. Up to $2MM of such debt may be eligible for this exclusion.

As we know from experience, depending on the facts and circumstances surrounding a short sale, they can take quite a while to market, sell and close.

Also, it is important to advise your prospects that the bankruptcy laws do not generally extinguish obligations of the debtor to the IRS.

Thus, if you are having a hard time persuading a prospect that the time to act is now rather than later, now is a good time to advise them of the sunsetting of the law currently if effect that may save them as much as 10's of thousands of dollars!

LEGAL - THIS POST IS NOT INTENDED TO BE NOR SHALL IT BE DEEMED TAX ADVISE - I am a lawyer that handles short sales, loss mitigation, asset protection, foreclosure defense and other work-out solutions as well as many other matters related to real estate, business and other areas of the law. I AM NOT A TAX LAWYER, CPA, or ACCOUNTANT. As such, you should always advise your prospective clients to consult with a CPA when seeking advise on tax matters.

May you all enter into many contracts!