LAW OFFICE OF BARRY W. ROREX, PLC
AFFORDABLE LEGAL REPRESENTATION (520) 495-7596
HAMP - HOME AFFORDABLE MORTGAGE PROGRAM
HARP - HOME AFFORDABLE REFINANCE PROGRAM
Often, rather than resort to foreclosure and the expense of reselling a property, lenders are willing to modify the borrower's obligation in some way so as to, hopefully, keep the borrower in the property. Loans may be modified in several ways. The interest rate can be lowered. The term of the loan can be extended. The loan amount can be reduced. Or, any combination of these modifications can be made in order to reduce the monthly payments.
In practice, few lenders are willing to modify the loans in all but the most dire circumstances. Major real estate lenders, such as banks, routinely require borrowers to be significantly behind in their payments before they will even discuss modification.
POTENTIAL TAX TRAP
Fortunately, there is currently a window for many homeowners to avoid this taxation. The Mortgage Debt Relief Act of 2007 allows many homeowners to exclude from taxable income the discharge of debt on their principle residence. As currently written, the exclusions are scheduled to expire in 2012. There are limitations on the amount and types of property subject to the exclusion so this is a topic that should be discussed in detail with an attorney or tax professional.