The 2007, Mortgage Forgiveness Debt Relief Act exempted homeowners from paying income taxes on any portion of their mortgage that is either forgiven in foreclosure, eliminated it in a short sale or reduced in a principal reduction agreement entered into between homeowners and the financial institution. This has been a tax break that has saved homeowners tens of thousands of dollars in Federal Income taxes. Most homeowners are unaware that any reduction in the amount of their mortgage would be considered income to them and taxable by the Internal Revenue Service.

Example

Let’s assume that you purchased a home for $350,000. Unfortunately, it goes into foreclosure. Let’s assume you took out a $300,000 mortgage on your home and at the time of the foreclosure sale, you owed $250,000. At the sale, the home sells for $100,000. Therefore, there would be $150,000 of your mortgage that would not be paid. Under the present law, the Mortgage Forgiveness Debt Relief Act of 2007, your financial obligations to pay income taxes on this $150,000 are eliminated. Once this statute expires, you would have to pay income taxes on the $150,000. Now let’s assume for purposes of this discussion your income tax rate was 30%. This would cause you to pay $45,000 in income taxes as a result of your home being sold in foreclosure. This would be a shock to most homeowners!

Celebrities are among the four million Americans whose homes have been foreclosed on in the past five years. Being a celebrity allows you to accumulate large sums of money. However, being a celebrity doesn’t mean you have enough money to pay your bills. The following is a list of celebrities whose homes have been foreclosed on:

Chris Tucker

Chris Tucker is a comedian. He owned a property called Bella Collina in Lake County, Florida. SunTrust bank, in October of 2012, brought a foreclosure proceeding against Mr. Tucker. In this proceeding, the bank alleged that he owed $4.5 million. Mr. Tucker bought the house when the real estate market in Florida was still high. In the end, he was able to sell the house in a short sale. It has also been reported that Mr. Tucker is indebted to the IRS for $11.5 million related to back taxes.

Rhianna

Rhianna is a singer. She owns a home located at Janus Place in Beverly Hills, California. Her home is approximately 8500 square feet. She purchased the home for approximately 7 million dollars in 2009. Shortly after purchasing the house, there was a flood which caused “extensive damage” to the home. It had been listed for sale for $4.5 million. Rhianna has defaulted on making the payments on her mortgage. She has requested the home be sold in a short sale.

Burt Reynolds

Burt Reynolds owned a home in Hobe Sound, Florida. He was more than two years behind on his home payments. It is estimated that his mortgage payments were over a million dollars behind. He seeks to sell the home in a short sale for approximately five million dollars. It is estimated that he paid over $15 million for the house when the real estate market in Florida was much stronger. The house is a waterfront piece of property and has approximately 13,000 square feet of living space. In addition, he has a helipad and a docking area for his yacht.

About The Author

Elliot S. Schlissel, Esq. is an attorney with more than two decades of experience representing individuals whose homes have been foreclosed. He litigates cases involving mortgage fraud, robo-signers and fraudulent foreclosures.

In 2012, 309,000 Americans received mortgage for relief from their financial institution. As part of the landmark settlement over foreclosure abuses, $6.3 million was cut from homeowners’ mortgages in 2012. Each homeowner, who will receive mortgage relief, received approximately $85,000 in reductions in the amount they showed. Homeowners in New York State received approximately $625 million dollars in funds for mortgage relief. Over 7,000 New York homeowners benefited from these mortgage reduction packages.

The mortgage relief packages were part of a settlement of a lawsuit brought by the United States government and the Attorneys General in 49 states. The total settlement package was over $25 billion. The banks involved in the settlement were Ally Financial Inc., Bank of America Corp., JP Morgan Chase & Company, Citibank and Wells Fargo & Company. The lawsuits brought by the Federal government and the state Attorneys General dealt with problems caused by many financial institutions bringing foreclosure proceedings without properly investigating as to whether they had the appropriate documents to verify they were owed the money from the homeowners.

Unfortunately, there are an additional 11 million Americans who owe money to the financial institutions in amounts more than their homes are worth. All of these Americans have homes that are under water. There are 11 million homeowners also in need of help with their mortgages!

About The Author

Elliot S. Schlissel, Esq. is an attorney with more than 45 years of experience. He is a former president of the Commercial Lawyers Conference of New York, a regional bar association. He has been representing individuals regarding foreclosure defense, mortgage modifications and fraudulent mortgages for more than two decades.

In 2012, 309,000 Americans received mortgage relief from their financial institution. As part of the landmark settlement over foreclosure abuses, $6.3 million was cut from homeowners’ mortgages in 2012. Each homeowner, who received mortgage relief, received approximately $85,000 in reductions in the amount they showed. Homeowners in New York State received approximately $625 million dollars in funds for mortgage relief. Over 7,000 New York homeowners benefited from these mortgage reduction packages.

The mortgage relief packages were part of the settlement of a lawsuit brought by the United States government and the Attorneys General in 49 states. The total settlement package was over $25 billion. The banks involved in the settlement were Ally Financial Inc., Bank of America Corp, JPMorgan Chase & Company, Citibank and Wells Fargo & Company. The lawsuits, brought by the Federal government and the state Attorneys General, dealt with problems caused by many financial institutions bringing foreclosure proceedings without properly investigating as to whether they had the appropriate documents to verify they were owed the money from the homeowners.

Unfortunately, there are an additional 11 million Americans who owe money to the financial institutions in amounts more than their homes are worth. All of these Americans have homes that are under water. There are 11 million homeowners also in need of help with their mortgages!

About The Author

Elliot S. Schlissel, Esq. is an attorney with more than 45 years of experience. He is a former president of the Commercial Lawyers Conference of New York, a regional bar association. He has been representing individuals regarding foreclosure defense, mortgage modifications and fraudulent mortgages for more than two decades.

In the spring of 2012, more mortgages on Long Island were “underwater” than in the spring of 2011. In Nassau and Suffolk counties, 48,546 homeowners owed more on their mortgage then their homes were worth. This amounted to 9% of all the homeowners on Long Island. This number is up 8.4% from of the prior year.

Troubled Homeowners

Peter Elkowitz, the president and chief executive of the non-profit Long Island Housing partnership, stated “we see a lot of people coming in [to the Long Island Housing Authority] whose mortgages are definitely underwater, who need assistance.”  Although the percentage of homes under water is increasing, it is still less than the national average. In the United States, approximately, 10.8 million homeowners find their mortgages to be under water. This represents 22.3% of all homeowners that have mortgages.

Will Homeowners Recover?

If you own a single family home, and its value has decreased by 50 to 70% from the top of the market, it is unlikely the value of your home will recover in the near future to the point where the mortgage is no longer under water.

Employment And The National Economy

The solution to declining real estate values relates to the overall picture of the American economy. When the economy picks up, the allure of owning a single family home will increase again. This will cause home values to increase and the over supply of homes on the market will decrease. Until this happens, most homeowners on Long Island will find their most valuable asset not to be the investment they dreamed it was.

About The Author

Elliot S. Schlissel, Esq. is an attorney with more than 45 years of legal experience representing individuals and families concerning mortgage issues, real estate issues and foreclosure defense matters.

Home Builders Have A Positive Outlook For The Future

In August, 2012, home builders, in the United States, had a more positive outlook than at any time during the past five years. The National Association of Home Builders has taken the position the housing industry is turning a corner. Although sentiment among homebuilders is higher than it has been for a long time, the overall market conditions in the building of new single family homes is still poor.

Barry Rutenberg, from the National Association of Home builders/Wells Fargo Housing Market Index, stated “while there is still much room for improvement, we have come a long way from the depths of the recession and the outlook appears to be brightening.” Home builders expect sales of single family homes to increase for the next six months.

New Home Sales Are Higher

Sales of new homes are being made at a higher rate in 2012 than they were in 2011. It should be noted 2011 home sales were at the lowest level in half a century. Mortgage rates also are still near record lows. This has been a motivating factor for prospective purchasers with the ability to obtain low cost mortgages. Can the optimism among home builders be indicative the economy in the United States is recovering? This is still questionable. For the economy to recover, the employment rate must be higher than the 8.1% rate that exists today.

It should also be pointed out the economy in Europe is also weak and this will impact on the economy in the United States.

Has The Housing Market Bottomed Out?

In recent weeks there have been numerous articles discussing the bottoming out of the housing market. Recently, a real estate monitoring company’s chief economist issued a statement claiming the decrease in values for single family homes in the United States had bottomed out. And the economist stated “the housing recovery is holding together despite lower than expected job growth due to organic strength of its own.”

New Home Sales And Unemployment

Each time a new home is built in the United States, it has the impact of creating three jobs and generating $90,000 of new tax revenue. This has an overall affirmative impact on the local economy.