Foreclosure Relief Bill

You may have read in the papers that Livingston County foreclosures are at an all time high. Short sales are also on the rise.

A short sale means a homeowner sells his/her house for less than what is owed. If the seller can prove hardship with no way of bringing the balance owed to the closing table, the bank will waive the deficiency and the seller walks away with bruised credit. For more information on Short Sales, read our blog post "What Is A Short Sale"

A homeowner is required to pay taxes on this “forgiven” debt. The Foreclosure Relief Bill will eliminate this requirement.

The legislation, passed by a 386-27 House vote, would give a tax break to homeowners who have mortgage debt forgiven as part of a foreclosure or renegotiation of a loan. No taxes would be owed on the value of any debt forgiven or written off. Currently, such debt forgiveness is taxable income.

The next step for the bill is Congress. Stay posted.