Posted on: 07th Apr, 2009 06:42 pm
I bought my townhouse in May 2004 and in June 2007 I had to move out of state for my job. When I left I found a tenant to rent the property to help off set my mortgage payments and my rent where I moved. Unfortunately my tenant has just notified me that they need to move out and without their rent payment I can't make mortgage and pay my rent at the same time. Even with the tenant I was I was still having to cover about $700 in monthly HOA and mortgage payments. Now that they will move out there is no way I can pay my mortgage and still pay rent. I called my lender and they are sending me information regarding DIL and short sale. My question is will the fact that the property was a rental for the past 1 1/2 years cause me not to qualify under the debt relief act? I lived in the house from May 2004 to June 2007 and the house is in California. I need to know what other repercussions there are other than my credit rating.
i am dealing with almost the exact same thing. If you hear anything please advise and I will do the same.
Thanks.
Thanks.
Hi,
Welcome to forums!
To iiredornage!
You can take the advantage of the Mortgage Forgiveness Debt Relief Act in certain cases. The debt forgiven by the lender must be on a mortgage for your principal residence. Your home will be considered your principal residence based on the time limit you lived in it for the past five years.
As you converted your house into a rental property, there are chances that you won't get the benefits of the Mortgage Forgiveness Debt Relief Act.
To Kachman,
It would be better if you could explain your situation in detail. This will help me in answering your query.
Feel free to ask if you have further queries.
Sussane
Welcome to forums!
To iiredornage!
You can take the advantage of the Mortgage Forgiveness Debt Relief Act in certain cases. The debt forgiven by the lender must be on a mortgage for your principal residence. Your home will be considered your principal residence based on the time limit you lived in it for the past five years.
As you converted your house into a rental property, there are chances that you won't get the benefits of the Mortgage Forgiveness Debt Relief Act.
To Kachman,
It would be better if you could explain your situation in detail. This will help me in answering your query.
Feel free to ask if you have further queries.
Sussane
So I would have to pay taxes on the amount if DIL happens on the property?
I am currently living in military housing in which I pay rent, we had planned on going back to the house as soon as I am allowed to return to my home of record and the only reason it was rented was to allow me to pay both rent and the mortgage. When we file taxes it still shows California as my home of record and we do not file taxes in Guam where I am currently assigned. I also file as a California non-resident. Does the fact that since I bought it 2004 I lived in it for 3 years and have only had it as rental property for less than two years matter? I need to know if the debt act applies or not so I can make a decision whether bankruptcy would be better or the DIL?
I am currently living in military housing in which I pay rent, we had planned on going back to the house as soon as I am allowed to return to my home of record and the only reason it was rented was to allow me to pay both rent and the mortgage. When we file taxes it still shows California as my home of record and we do not file taxes in Guam where I am currently assigned. I also file as a California non-resident. Does the fact that since I bought it 2004 I lived in it for 3 years and have only had it as rental property for less than two years matter? I need to know if the debt act applies or not so I can make a decision whether bankruptcy would be better or the DIL?
Sory about the previous post. I thought I was logged in already.
Hi iiredorange,
As far as I know, if you can prove it to be your principle residence, then you can take the advantage of the Mortgage Forgiveness Debt Relief Act. In my opinion, bankruptcy should be your last option. If you want to save the property and stay in it, then you can even apply for a loan modification.
As far as I know, if you can prove it to be your principle residence, then you can take the advantage of the Mortgage Forgiveness Debt Relief Act. In my opinion, bankruptcy should be your last option. If you want to save the property and stay in it, then you can even apply for a loan modification.
I guess I will call the IRS 800 number to get more information about the Tax Relief Act. Unfortunately I am in Guam and the taxes here go to the local government so the IRS has no office here. You mentioned loan modification and I spoke to the bank somewhat about it, but has anybody here ever had the bank lower the amount of the loan to the current value of the property as they would be willing to accept in a short sale? Let's say the property loan was about $450K and the current value if sold in short sale would be about $250K. Would the bank be willing to modify the loan to $250K and avoid the short sale or foreclosure all together.
Hi redorange,
I think you are speaking about principle reduction. Well, in most cases, I don't think the lenders agree to a principle reduction. You need to speak to your lender about the option of principle reduction and check out if he agrees to it. You can inform him about your hardship and convince him for a principle reduction.
I think you are speaking about principle reduction. Well, in most cases, I don't think the lenders agree to a principle reduction. You need to speak to your lender about the option of principle reduction and check out if he agrees to it. You can inform him about your hardship and convince him for a principle reduction.
i understand the emotionally draining part as it's already taking a toll on my family as far as stress. i know someone else going through the same thing and i don't look forward to going through this whole thing.
well the house was bought by using the 80/20 deal that was so popular at the time and i refinanced a year later to pay some bills and fix up somethings in the house again as a 80/20. so i have a first mortgage and a home equity loan on the house. the one of the loans become an arm in 2012 and the other in 2015. just trying to get things in order now before faxing everything to wells fargo for both loans and attempting to do a short sale. if they agree to it fine if they don't the house will just sit until they come around. because i sure as heck am not making anymore payments on the house since i can't afford it at this point.
thanks on the irs info and i hope that's what i hear from them when i finally get someone there.
well the house was bought by using the 80/20 deal that was so popular at the time and i refinanced a year later to pay some bills and fix up somethings in the house again as a 80/20. so i have a first mortgage and a home equity loan on the house. the one of the loans become an arm in 2012 and the other in 2015. just trying to get things in order now before faxing everything to wells fargo for both loans and attempting to do a short sale. if they agree to it fine if they don't the house will just sit until they come around. because i sure as heck am not making anymore payments on the house since i can't afford it at this point.
thanks on the irs info and i hope that's what i hear from them when i finally get someone there.
Hi redorange,
I can understand that you are facing a tough time. I would suggest you to write a hardship letter to the lender and apply for the deed in lieu. The lender will judge your financial situation depending upon that letter and let you know whether they would accept your request or not.
I can understand that you are facing a tough time. I would suggest you to write a hardship letter to the lender and apply for the deed in lieu. The lender will judge your financial situation depending upon that letter and let you know whether they would accept your request or not.
The house short sale closed on October 1st so I guess I will find out about the tax implications come April 15.