"Thoughts on Walking Away from Your Home Loan" – New York Times
The New York Times published this story entitled, “Thoughts on Walking Away from Your Home Loan,” on the front page of this past Saturday’s paper.
It was interesting to see this kind of story take such a prominent position in the New York Times. Given all the short sales with people upside down in their homes, it’s not surprising I guess that we would see the Times publish such a story.
Given the millions of people who have/will go through foreclosure and the couple million who will likely go through with short sales, banks and credit agencies are likely to have to figure out how to deal with this period of time when so many people lost their homes.
Many have speculated that at some point in the future, perhaps a foreclosure won’t be quite as big a hit to ones credit scores as it has historically been.
We’ve already seen Fannie Mae modify its mortgage guidelines due to the incredible numbers of short sales out there. If you weren’t aware, last August, Fannie Mae came out and stated that they would allow a borrower to qualify again for a Fannie Mae backed home loan 2 years after a short sale was completed. That’s a big improvement over the foreclosure classification which often times requires 5+ years before they would back a loan again. Be sure to read my post on January 14, 2009 entitled, “Foreclosures, Short Sales and Bankruptcy…How They Affect Your Credit.”
The New York Times article referred to the US Government’s Mortgage Debt Relief Act. On the IRS’ web site they state that if you’ve had mortgage debt relieved, you may likely qualify based upon certain IRS rules to be exempt from paying income tax on that debt relief provided that debt was relieve between 2007-2012.
