Renegotiating a lower loan/rate does NOT constitute cancelation of debt…(COD)
Having a foreclosure (or short sale) does.
Now there appears to be NO REASON to want to deal with a short sale, just stay in the property as long as you can without paying, and get foreclosed on.
Your credit gets whacked, but you no longer have any income tax liability from a 1099-C for COD if you have recourse debt.
Cannot believe that this is that simple, and they didn’t understand it would be a FREE PASS from recourse debt.
If it IS actually that simple, how long will it be until it gets repealed/overturned ??
Assuming that it is a free pass, and will take 6-7 months minimum to go to trustee sale, I can see NOD’s skyrocketing beyond imagination by April-May, and foreclosure sales in August being the highest in history by a huge multiple….
BUT what if they change this program in the 1st or 2nd Q 2008 when they realize what has happened ??
Can you believe that they didn’t know this would encourage FC’s ?
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Private Mortgage Insurance WAS tax deductible for the first time ever in 2007, with income limitations, but ONLY for 2007….
The deduction was just extended for 3 more years.
