collateral damage... ~ As a side note, the principal reductions will actually hurt homeowners more than they help them, unless Congress extends the Mortgage Forgiveness Debt Relief Act. If not, all principal reductions of this type will be taxable income for the homeowner. Poor people who need principal write-downs to save their house don’t typically have bags of cash lying around to pay off tax bills they didn’t think they’d get. The hardship exemptions for homeowners who cannot pay the tax require significant tax planning, the functional equivalent of declaring bankruptcy to the IRS. It will be a nightmare for homeowners who get blessed with this “gift.”
Posted on: Thu, 21 Nov 2013 00:40:51 +0000