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Our file has been setup and waiting in HomePath for Seterus to take the next action. We turned it down, had to provide a Letter of Explanation.
So I had to put that together, send it to my agent, so he could upload it to HomePath. I say it better be or they are going to see one unhappy camper.
Friday we received the official approval letter for the short sale. I had to provide a couple more documents to GreenTree, but the word is that they will issue the settlement acceptance letter in a day or so. Its official, GT issued an acceptance letter last week agreeing again to take the 6k settlement offered by BOA and fully extinguish our debt. The final hurdle is for the buyers to complete their financing and we close before the scheduled July auction date. Right now we are on track to close a few days before the auction. SDinWA would you mind sharing the contact info for your agent? We are looking at initiating the short sale process as well.
Just when you think nothing could go wrong, it goes wrong. We were in the final stretch of the short sale a few weeks back. So it was looking pretty grim with the foreclosure sale approaching and no buyer. My agent scrambled to get it relisted, and Seterus said if we get a buyer under contract before the sale date, they would request a postponement. Nothing was happening and the trustee sale was a week away when boom, our original buyer got a new job. We hustled in the new contract and the postponement was issued a couple days before the sale! Now, assuming this all goes as expected, we will close sometime in August. Last week, we closed on the Short Sale with the Seterus 1st and the Green Tree 2nd. All said and done I will maintain that this is the single best financial decision we have ever made. It might sound counter intuitive, but its the truth.
Sure, we purchased some houses in the past, built equity and rolled it forward. However, when we purchased the last house, all prior equity was lost. Never in my personal financial history have I been able to do that. Thanks for all the transparency, excellent advise and encouragement.
Out of curiosity, have you spoken to a CPA or other tax professional about the tax implications of this resolution?
Specifically, I am wondering whether you were given any advice on what portion of the forgiven debt might be taxable. Since you have not been living in the house for some time I am curious whether the personal residence exclusion might still apply, assuming that it is extended (which is anything but certain). They are treated differently when you want to buy or refinance. The codes are sometimes incorrect on the credit report, and borrowers are being told they will need to have them corrected to proceed with their new home loans.
Also, it appears that in all likelihood that the MDRA (Mortgage Debt Relief Act or Mortgage Debt Forgiveness Act) is going to be extended for 2015 and 2016. The bill is before the house and senate and hopefully its passed into law. Since 2007, the LoanSafe forums have helped millions of homeowners over the last 13 years either save their homes with a loan modification, obtain a short sale, forbearance, or walk away legally loan companies for people with bad credit from their underwater mortgages. Thanks Vantuckian, I will be checking back in here and updating the thread with information about credit, taxes and possible loans in the future. With the Mortgage Debt Forgiveness Act being extended to 2017, after my taxes it looks like I will be completely in the clear from this mess.
The next thing will be to monitor my credit to see how it rebounds. I short sold my home and assumed I was good to go with the Mortgage Debt Forgiveness Act to avoid a huge tax burden. Of course it only applies to your primary residence. Well it was until I think I made a slightly tactical error....
Was my house my primary residence or was it a rental?
I was renting another house to live in, but renting out my house that was being short sold. I believe I may wind up in the same boat at some point so I have been researching this point for a while. From what I have found, its essentially unclear exactly what defines primary or principle residence.
There are standards defined for different situations, so for capital gains exclusions, principle residence is one that you have lived in 2 years out of the last 5. Ultimately this is really not an easy question to answer if you have rented the place out for a period of time. I have read some opinions suggesting that if you bought a new place and rented out the old one to delay selling into a bad market, you could still define the old place as your primary residence.
There are a few things working against me on the MDRA option. However, we were in it 3 of the last 5 years, out for a year with it unoccupied, then rented it for only 1 year.
Since I actually lived in my house for 3 years of the most recent 5 years.
So las vegas payday loans online it looks pretty solid that we will be able to exclude it all. Anyway, I may see a tax professional, but I entered all the details into my software and it negated the capital gains tax. For some details, see this IRS publication: I was hoping someone else would come to the same conclusion. I thought this las vegas payday loans online was the case at least I was willing to take the chance and go with that definition but its nice to hear that someone else come up with the same thought process.
What is interesting though and is still throwing me for a loop is if you use Turbo Tax, one of the questions it asks is did you rent your home out in 2015? Not sure I understand why renting out the home matters or not or even applies. I havent done loans san antonio my taxes yet so still just scratching the surface. Just wondering though did you get a 1099-C with the personally liable box checked?
Mine was and initially I was going to fight it with the lender but I am not sure it really matters. Technically I am not personally liable since the property is in CA and if they want to hold me personally liable for the debt then they need to judically FC which they didnt. Yes, its comforting that we both came to the same conclusion. It took a little while for me to zero in on the 2 of the last 5 year definition. When I started this whole process, I was basically banking on insolvency as my way of excluding the canceled debt from my income. It makes total sense to me since I was personally liable at the time of the debt cancellation. Recourse and non-recourse aside, it seems to me on paper both you and I were personally liable for our loans, they were just forgiven. As far as the personally liable checkbox, I have been trying to confirm exactly how that is defined. I am in CA and I dont see how I could be personally liable based on the laws that govern real estate and the FC process. Yes the 2nd was forgiven but being that is was a purchase money, in CA that means it was non recourse.
On top of that in CA there is the one action rule which basically means the lender would have to judicially FC to seek a deficiency which the 2nd never did nor would they. I typically do them myself, so I decided to small cash loans take a swing at it alone without a CPA.
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This is hopefully the final chapter in the strategic default book.
I dont think using a CPA would have helped as I am sure they are split as well on the interpretation of primary residence. Since the MDRA doesnt define the requirements or restrictions on qualifying as a primary residence, I am relying on the only one I could find in IRS documentation. I did find some other opinions that the IRS and lawmakers loosely defined it for MDRA and so long as you can justify the status it could be accepted. In my case I documented my reasoning and filed it away with all my other tax return documentation so if it comes up I have it handy and dont have to dig through everything again. Last I posted, I filed my taxes, claimed my debt forgiveness and bad credit loans same day a year later no audit. Now we just have a car loan, some money saved and money going into retirement.
So before the walk, I had never missed a payment and always had excellent credit. All that to say, I feel like las vegas payday loans online the short sale was the best strategic move for me. There was a fair amount of counsel to not disclose financials and pursue the short sale from posters on this site, however, each scenario is different. In my case, it only costed us a measly 4k to close the short sale, and both the first apply for personal loan and second were completely forgiven. Never once was there any indication that our financials would be used against us. What most people worry about in disclosure is that they will find stashed money, but to be perfectly transparent.... If las vegas payday loans online that is your situation, then you really ought to consider short sale vs.
There are some mobile loan good programs out there, but its a bank by bank thing. I met with a lender today to get pre-qualified for another mortgage. I was able to confirm a previous post on this thread from another member regarding wait periods. After a short sale, without extenuating circumstances, you must wait 3 years for an FHA loan, 4 years for a conventional loan and 2 years for a VA loan. Its a great reason to strategically default, but not for getting another mortgage sooner. So we wait until August 2018 which is totally fine by me. I think the primary impact is on your ability to borrow again after the event. It appears that the credit bounces back at the same rate after either event or at least that is what other members here have indicated.