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Has this Act taken affect in California yet?

Thanks

blake2's picture
blake2 | Joined: May 7, 2008 03:33 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

It is Federal Legislation so I assume it has taken affect. It was passed in August. It just protects against the forgiven debt from being taxed as income. "FHA Secure" may also be what you are looking for?

"FHASecure expands the FHA's ability to offer refinancing by giving it the flexibility to work with homeowners who have good credit histories but cannot afford their current payments. By the end of 2008, the FHA expects this program to help more than 300,000 families [url=http://www.mortgagefit.com/refinance.html]refinance[/url] their homes."

Like | Dislike | Share | Posted: Wed, 05/21/2008 - 12:17 | Post subject:

suen64's picture
suen64 | Joined: May 21, 2008 11:11 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

thanks. On another note...I have a first and 2nd on my home (primary res. no other property owned) and both mortgages we used to purchase my home, they have never been refi'd, they are both with the same lender. I bought the home in 6/2006. Are both of my loans non-recourse loans or could the 2nd mortage get a DJ against me for the loan amount on the 2nd?

Like | Dislike | Share | Posted: Wed, 05/21/2008 - 12:40 | Post subject:

blake2's picture
blake2 | Joined: May 7, 2008 03:33 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

My education tells me they would both only be secured by your home but that is a really good question. I am nearly sure they are both non-recourse loans but could it be governed differently in California?

I don;t think so but I asked Cliff...

Like | Dislike | Share | Posted: Wed, 05/21/2008 - 13:21 | Post subject:

suen64's picture
suen64 | Joined: May 21, 2008 11:11 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Thanks! I look forward to Cliff's answer.

Best,
*sue

Like | Dislike | Share | Posted: Wed, 05/21/2008 - 13:30 | Post subject:

blake2's picture
blake2 | Joined: May 7, 2008 03:33 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

What are you trying to accomplish?

Like | Dislike | Share | Posted: Wed, 05/21/2008 - 13:32 | Post subject:

suen64's picture
suen64 | Joined: May 21, 2008 11:11 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I"m trying to find out what recourse the lender has against me if I try to work out DIL or short sale and [url=http://www.mortgagefit.com/foreclosure/17ways-avoid.html]avoid foreclosure[/url]. I know that with foreclosure they can't come back on me for more. But with the DIL or SS I want to know what they have legal right to do. If both loans are non-recourse I have a bargaining chip to avoid the foreclosure process since the outcome will be the same. In that case, either they agree to a DIL and forgive the debt and call it good, or they foreclose and add their foreclosure costs on top of the debt the they have to forgive.

However, if my 2nd is a recourse loan, then I don't have that bargaining chip and if they can come after me for the loan balance on the 2nd, then BK gets put on the table. Of course I'd like to avoid that...

Like | Dislike | Share | Posted: Wed, 05/21/2008 - 13:40 | Post subject:

blake2's picture
blake2 | Joined: May 7, 2008 03:33 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

With the DIL the second mortgage could possibly still be attached. So I would say the Short Sale will be a much better option for you. When you work with someone who really knows how to do a short sale they will take care of the second. For many reasons, it is extremely important that you work with someone that really knows the short sale process well.

Like | Dislike | Share | Posted: Wed, 05/21/2008 - 14:08 | Post subject:

suen64's picture
suen64 | Joined: May 21, 2008 11:11 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Thanks!

Like | Dislike | Share | Posted: Wed, 05/21/2008 - 14:43 | Post subject:

larry2's picture
larry2 | Joined: June 27, 2007 02:50 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi suen.

The Mortgage Debt Relief Act 2007 or Mortgage forgiveness Act does not apply in California. So if your debt is forgiven then you will have to pay tax on it as it will be considered as your income.

BTW know more about Tax Break for Mortgage Debt Forgiveness at http://www.mortgagefit.com/tax/debtforgiveness-reliefact.html

Best of luck,
Larry

Like | Dislike | Share | Posted: Tue, 06/17/2008 - 05:31 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Thanks Larry. I spoke to FTB the day after I asked this question. So the Mortgage Debt Relief Act 2007 only applies to Federal Taxes but not State, as you say. So, there would be no Fed taxes but there would be State. That said, I spoke to a BK Atty who told me that since both of my loans are purchase money loans, which makes them non-recourse loans, I wouldn't be liable for the taxes either. Is that your understanding as well?

Thanks,
*sue

Like | Dislike | Share | Posted: Tue, 06/17/2008 - 08:16 | Post subject:

Jessica's picture
Jessica | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Suen,

Nice to have you back here. But did you get logged out while posting?

I think there's a slight confusion here. It is true that the tax on unpaid debt is a kind of federal tax and not state tax. And in case of a purchase loan, one doesn't need to pay the deficiency if he's in California (anti-deficiency law). But just because the Mortgage Debt Relief doesn't apply here, one has to pay tax on any unpaid deficiency amount.

I hope I could clarify it. If you have further doubts, please don't hesitate to discuss with us here.

Regards,

Jessica

Like | Dislike | Share | Posted: Wed, 06/18/2008 - 05:19 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I am thinking of walking away from my home. I have a first and second. I intend on paying the second. I have another home that is co tenants, that I will moving back too. Can they come after me for that home?

Like | Dislike | Share | Posted: Sat, 10/25/2008 - 23:18 | Post subject:

Niicss's picture
Niicss | Joined: October 3, 2005 11:54 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Azngirly!

It is good that you will be paying off the [url=http://www.mortgagefit.com/second-mortgage.html]second mortgage[/url]. But if you do not pay the first mortgage, the first lender will foreclose the property. The first lender may also place liens on your other properties if his debts are not recovered. There are chances that the lender may garnish your wages as well.

Thanks.

Like | Dislike | Share | Posted: Mon, 10/27/2008 - 02:26 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Will a short sale cover both first and second mortgage?

Like | Dislike | Share | Posted: Fri, 12/26/2008 - 20:23 | Post subject:

Niicss's picture
Niicss | Joined: October 3, 2005 11:54 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Washington state

As far as I know, a short sale will not cover both the first and the second mortgage. The first will try to satisfy his dues first. If there is a deficient amount from the sale, then you need to pay it to the first lender.

Then comes the second lender. He will then try to recover his dues. If you cannot pay him the dues, he will then charge off the loan to a collection agency who will in turn collect the dues from you.

Thanks.

Like | Dislike | Share | Posted: Mon, 12/29/2008 - 00:30 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

My husband's employer is requiring him to relocate too far to commute. We are upside down on our house about 175,000. If we can't do a short sale, and we have to foreclose, do we have to pay the difference of our 376,000 loan to the value of our home now? What about a bankruptcy, will that eliminate that issue? We live in California. It is looking like we might have to go the foreclosure route at this point in time. What happens? The bank isn't really willing to work with us. Thanks for any info that you can provide. This is so stressful, we didn't get in over our heads when we bought, but now that we have to relocate, we find ourselves in a real big mess.

Like | Dislike | Share | Posted: Tue, 02/10/2009 - 11:14 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

It is my understanding that if the 2nd loan is also a purchase money - nonrecourse (in california), then the 2nd lender cannot come after you for the deficiency.

Like | Dislike | Share | Posted: Wed, 02/11/2009 - 07:37 | Post subject:

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