Wednesday, April 9, 2008

Stop Foreclosure with Program 3648

If you bought your home a year or two ago - you might be in the situation many homeowners are. You owe more than your house is worth. Because of the market slowdown, homeowners are seeing houses in their neighborhood sell for less than they did a couple years ago. This can become a scary prospect when you are forced to sell your home due to relocation, a lost job or death in the family. That's why the president and congress passed House Bill 3648 - the Mortgage Forgiveness Debt Relief Act of 2007. More commonly known as Program 3648.
Prior to program 3648, here is what happened. Lets say you fell behind in your mortgage payments, lost your job or just couldn't keep up with the bills. You decided to sell your house and get out from under the mortgage. You bought the house for $200,000 but could only sell it for $150,000. The bank would then issue a 1099 to you at the end of the year for $50,000. That meant that you would have to report $50,000 on your tax return and pay taxes on it. Can you imagine? What a tax bill.
Thankfully, congress and the president reacted to the market and created program 3648. The Mortgage Debt Forgiveness act means you are no longer liable for taxes on that difference you didn't pay the mortgage company. Now, there are some rules that apply to this program. It has to be your primary residence for instance. And you also need to make sure the mortgage company isn't going to come after you for the difference. If you have questions - you should always ask your accountant or the person who prepares your taxes.
As I talked about earlier this year, when you sell your house for less than you owe the bank it's called a short sale. Nationwide, only about 10-15% of short sales are actually approved. In order to make this kind of sale work it's important to know what you're doing. Recently, I partnered with a processing company that works with most of the banks in getting these kinds of sales approved. There are other options you can persue and I would be happy to discuss those with you anytime.


Your Central Florida Realtor said...


I am considering joining Program 3648 as a Realtor. What is your experience with them like?

Bo Buchanan said...

I found that the program really didn't work for me and we discontinued it after a few months.