Tag Archives: HSBC

Short Sale Debt Forgiveness is Back!

Debt Forgiveness Elk Grove Short Sales, Sacramento Short Sales
Debt Forgiveness Elk Grove Short Sales, Sacramento Short Sales

The California Association of REALTORS® announced yesterday it received a letter from the California Franchise Tax Board (FTB), obtained by Board of Equalization (BOE) member George Runner, clarifying that California families who lost their home in a short sale are not subject to state income tax liability on debt forgiveness “phantom income” they never received in a short sale.

Last month, in a letter to California Senator Barbara Boxer, the Internal Revenue Service (IRS) recognized that the debt written off in a short sale does not constitute recourse debt under California law, and thus does not create so called “cancellation of debt” income to the underwater home seller for federal income tax purposes. Following the IRS’s clarification, C.A.R. sought a similar ruling by the California FTB. Now with the FTB’s clarification, underwater home sellers are also assured that they are not subject to state income tax liability, rescuing tens of thousands distressed home sellers from California tax liability for debt written off by lenders in short sales.

“We are pleased with the recent clarifications issued by the IRS and California Franchise Tax Board, which protect distressed homeowners from debt relief income tax associated with a short sale in California,” said C.A.R. President Kevin Brown. “We would like to thank Senator Boxer and BOE member Runner for their leadership in obtaining this guidance from the IRS and FTB. Distressed California homeowners can now avoid foreclosure or bankruptcy and can opt for a short sale instead, without incurring federal and state tax liability, even after the Mortgage Forgiveness Debt Relief Act of 2007 expires at the end of the year.”

This is wonderful news for California families still struggling with an underwater home. We still recommend all REALTORS® encourage their clients to speak with a tax professional who can advise them on their specific situation. This information in no way should be taken as either legal or tax advice.

(Sacramento Association of REALTORS® Web Log, Caylyn Brown Thursday, December 5th, 2013)

Check Your Mail – Payments to 4.2 Million “Distressed” Borrowers Happening Now

Actual check received in the amount of $2000 by one of my past clients in her mail today; she had completed a short sale. Envelope reads "Important Payment Agreement Informaton Enclosed" from the Office of the Comptroller of the Currency and the Board of Governors of the Federal Reserve System
Actual check received today by one of my past clients who completed a short sale. Envelope reads “Important Payment Agreement Informaton Enclosed” from the Office of the Compftroller of the Currency and the Board of Governors of the Federal Reserve System
If you have been foreclosed on or have completed a short sale, don’t be so quick to throw away mail from your past lender. Payments to 4.2 million borrowers will be distributed to those whose homes were in any stage of the foreclosure process in 2009 or 2010 and whose mortgages were serviced by one of the following companies, their affiliates, or subsidiaries: Aurora, Bank of America, Citibank, Goldman Sachs, HSBC, JPMorgan Chase, MetLife Bank, Morgan Stanley, PNC, Sovereign, SunTrust, U.S. Bank, and Wells Fargo.

In most cases, eligible borrowers will receive a letter with an enclosed check sent by the Paying Agent–Rust Consulting, Inc. Some borrowers may receive letters from Rust requesting additional information needed to process their payments. Rust is sending all payments and correspondence regarding the foreclosure agreement at the direction of the OCC and the Federal Reserve.

Borrowers can call Rust at 1-888-952-9105 to update their contact information or to verify that they are covered by the agreement. Information provided to Rust will only be used for purposes related to the agreement.

Watch out for scams. Beware of anyone who asks you to call a different phone number than the number above or to pay a fee to receive a payment under the agreement.

SO WHAT’S THIS ALL ABOUT
The Federal Reserve Board issued enforcement actions against four large mortgage servicers
–GMAC Mortgage, HSBC Finance Corporation, SunTrust Mortgage, and EMC Mortgage Corporation–in April 2011. Under those actions, the four servicers were required to retain independent consultants to review foreclosures that were initiated, pending, or completed during 2009 or 2010. The review was intended to determine if borrowers suffered financial harm directly resulting from errors, misrepresentations, or other deficiencies that may have occurred during the foreclosure process.

A number of servicers supervised by the Office of the Comptroller of the Currency (OCC) were also required to conduct independent reviews.

The deadline to request an independent review was December 31, 2012.