If you are struggling to meet your mortgage payments and have even missed a few there may be a bit of good news. For those home buyers who financed through Freddie Mac and Fanny Mae beginning December 17 and December 19, respectively, the two mortgage giants will suspend all bank repossessions. On January 2, 2013, evictions will resume. The Bank of America also said it will halt foreclosure evictions, both of the loans it owns and for those it services for investors, during the holiday period.
Don’t wait until you’re in a situation where you’re facing eviction. If you lose your job or some other personal disaster makes it impossible to continue making months or years of mortgage payments then consider a short sale. In a short sale the homeowners sell at a price that is less than what they owe the back.
It takes some time to get bank approval for a short sale AND you must keep up with your mortgage payments until you close on the sale. It is important to decide quickly and to use a Realtor who knows how to handle a short sale.
There is one more draw back you should know. The Mortgage Debt Forgiveness Act allowed that homeowners didn’t have to pay federal tax on the unpaid mortgage debt. If Congress doesn’t act to extend the Act it will expire on December 31, 2012. That means in January the IRS will begin treating the portion of the unpaid loan balance as taxable income. This is like kicking someone when they are down. Usually, those people selling their home in a short sale situation are not in a position to pay additional tax.
This is an instance where contacting your Representative in Washington, D.C. to urge extension of the Mortgage Debt Forgiveness Act would be desirable. If charity begins at home and the holidays are a time of goodwill, then call or write your Senator or Congressmen today.