Movie fans will remember that famous scene from Thelma & Louise when both ladies drive their car off a cliff at the end of the movie. This scene is a sober reminder of what could have happened recently had Congress and the President not reached an agreement to stop the country from going over the Fiscal Cliff.
One huge part of the Fiscal Cliff deal, which was signed on January 2nd 2013, was the extension of the Mortgage Debt Relief Act of 2007.
Thanks to the Mortgage Debt Relief Act Extension, underwater homeowners in Orange County and across the United States can continue Short Selling their homes without the fear that they will have to pay taxes on mortgage debt, up to $2 million.
A Welcome Sigh Of Relief
Without the Mortgage Debt Relief Act being extended, homeowners nationwide would have had to pay taxes on the shortfall or balance that remained on their mortgages.
For example: if a homeowner had a $150,000 mortgage and the home sold for $100,00 in short sale, the homeowner would have had to pay taxes on the remaining $50,000.
Keeping The Real Estate Market Growing
Across the United States, Short Sales have accounted for up to 50% of home sales and without the Mortgage Debt Relief Act Extension, the average underwater homeowner would have most likely let their home go into Foreclosure instead of choosing Short Sale where they would face the prospect of paying taxes on the remaining balance. As a result of the extension, they will be afforded the protections of not having to pay the additional taxes in addition to the hardship they are already facing.
Help For Distressed Homeowners
Recent statistics have shown that in cities like Las Vegas Nevada, over 50 percent of homeowners have a mortgage that’s underwater and they owe more on their home than what it’s worth.
With the Mortgage Debt Relief Act Extension, distressed homeowners in 2013 can have the option of choosing a Short Sale versus a Foreclosure and take advantage of all of the benefits that the Short Sales can offer them including the certainty that it offers. During the foreclosure process, the homeowner is constantly faced with the uncertainty of exactly when the sheriff will show up on their doorstep for the eviction.
If you’re a distressed homeowner in Orange County and are considering short selling your home, contact Fred Sed & Associates today by calling (949) 272-0125.