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REAL ESTATE FINANCING ARTICLES

Foreclosure and Your Taxes

By Christopher Combs | May 4, 2014

  Question:  We bought our home in a new Gilbert subdivision six years ago.  Although there has been some appreciation lately, our home is worth only $260,000.  We still owe $380,000 on the mortgage.  After my husband lost his job last year, we finally had to stop making payments, and the foreclosure occurred this February.  Our accountant now says that we could have income tax liability for the $120,000 difference between the amount of our mortgage ($380,000) and the value of our home ($260,000) at the time of the foreclosure.  Many of our neighbors in our subdivision have lost their…

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Adios to Mortgage Forgiveness Tax Relief Act ("Act")

By Christopher Combs | December 19, 2013

The general IRS rule is that any forgiveness of debt will be taxable. In response to the housing disaster of the mid-2000’s, the Act was passed by Congress in 2007 to give relief to taxpayers who had debt forgiveness as the result of either a foreclosure or a short sale. The Act was subsequently extended until December 31, 2013. A bill to extend the Act for another two years to December 31, 2015, has been in the Senate Finance Committee since June 19, 2013. GovTrack.us gives this bill a 1% chance of getting out of committee and a zero percent…

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Can Retiree’s Checks Be Garnished?

By Christopher Combs | August 16, 2013

Question: I am a retired Marine Corps colonel living in Sun City with my wife of 47 years. Several years ago, our son and his wife wanted to borrow money for landscaping and a swimming pool in their backyard. We wanted our grandchildren to have a nice backyard, so we co-signed on the loan. Our son and his wife have now lost the home to foreclosure and have filed for bankruptcy. The lender has hired a collections attorney to hound us. This collections attorney says that the paychecks of federal employees, including military personnel, can be garnisheed to pay off a…

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Mortgage Lender Sees Lien As Red Flag

By Christopher Combs | June 29, 2013

   Question: My wife and I just got married, and we are purchasing our first home in Mesa. Several years ago we got into a dispute with a travel agency, and the travel agency got a judgment against us for $1,100 for a Hawaiian vacation trip that we never took.   We have refused to pay this $1,100 judgment, which has now been recorded.  We know that at the closing of the home, this judgment will be a lien. The mortgage lender, however, is telling us that we cannot even close on our home unless we pay this judgment.   If…

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Owner retains title under reverse mortgage

By Christopher Combs | March 16, 2013

  Question: My parents have owned their Glendale home for more than 20 years. They own their home free and clear. My parents now want to get a reverse mortgage on their home to get monthly payments from the mortgage lender in order to supplement their Social Security income. Upon their death, they want my brother and me to inherit the home. If my parents get a reverse mortgage, will my parents still own the home?   Answer: Yes. Reverse-mortgage financing is no different from any other financing of a home in that the borrower continues to own the home.…

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New Seller Carry-Back Financing Rules

By Christopher Combs | March 7, 2013

       Seller Carry-Back Financing Rules As anticipated, some of the new Dodd-Frank seller carry-back financing rules will now apply to any financing provided on owner-occupied housing, including seller carrybacks. While the term “mortgage originator” is defined broadly under the Dodd-Frank Act (See 15 U.S.C. §1631), an exemption exists for property owners offering seller carry back financing wherein certain owner-financiers are excluded from having to obtain a loan originator’s license provided that certain qualifications are met. On January 20th, the Consumer Financial Protection Bureau (“CFPB”) provided some much needed clarity on seller carryback financing under Regulation Z of the Truth…

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Tax Breaks Can Lift Homeownership

By Christopher Combs | January 26, 2013

Question: In recent articles about the current annual $1 trillion deficit of the federal government, one of the ways discussed to reduce this annual deficit is to eliminate or limit the mortgage-interest deduction for homes. This deduction costs up to $100 billion per year. Why is there a mortgage-interest deduction for homes when there is no such deduction for office buildings? Answer: The mortgage-interest deduction allows homeowners to deduct the mortgage interest on not only their primary home but also on a second home. This mortgage-interest deduction applies to both federal tax liability and state tax liability. A homeowner also…

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Retired Son's Plan Puts Parents At Risk

By Christopher Combs | November 12, 2012

Question: After my son’s wife died, he used the life insurance proceeds to pay off the mortgage on their Gilbert home, and my son took early retirement. My son now wants to take out a home equity line of credit on his home and use the HELOC funds to buy one or two small investment homes. He wants us, however, to co-sign for the HELOC. We are elderly and we do not want to risk our financial security. Inasmuch as my son’s home is free and clear, why isn’t his home enough collateral for the HELOC? Will we be liable…

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