Those who lose homes may face state tax hit

Those who lose homes may face state tax hit: "The state-tax hit could be substantial and the rules are complex. People in mortgage trouble should consult a qualified tax professional.

Normally, when a lender forgives debt, the forgiven amount is taxed as income.

One exception is nonrecourse debt. On nonrecourse debt, if a borrower defaults, the lender can seize the collateral but can't go after the borrower's other assets. Forgiveness of a nonrecourse mortgage generally does not result in tax on canceled debt income.

A mortgage used to buy a home is usually nonrecourse. But if the borrower refinances the loan and takes cash out, or takes out a home equity loan or line of credit, that debt usually is recourse debt. Canceled recourse debt is subject to income tax.

Exceptions to the tax also apply if the borrower is bankrupt or insolvent."
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"People are starting to notice that California taxes may be significant."

Attorney General says Foreclosure Consultants must register

Note the California Association of Realtors states that Realtors are acting as foreclosure consultants when they contact the lender on behalf of upside down homeowners.

Note 2: California Attorneys are not Foreclosure consultants when they render service as part of their Attorney practice. 

 

Consumers - Foreclosure Consultant Registration - California Dept. of Justice - Office of the Attorney General

After July 1, 2009, with certain limited exceptions, it is illegal to operate as a mortgage foreclosure consultant in California unless the foreclosure consultant has obtained from the Department of Justice a Certificate of Registration as a Mortgage Foreclosure Consultant. In order to obtain the Certificate of Registration required by California Civil Code section 2945.45, a foreclosure consultant must complete the application and provide all required documents to the Department of Justice.

If you are a foreclosure consultant, to be certain that you obtain your Certificate of Registration by July 1, you should submit your application no later than June 15, 2009. Be certain to submit with your application, a copy of the contract you will use with clients and all of the other documents required by the application form. You should send this information along with your check for the $850 filing fee made payable to the “California Attorney General’s Office” to:

Foreclosure Consultant Registration Program California Attorney General's Office Consumer Law Section 300 South Spring Street, Suite 1702 Los Angeles, CA 90013

Before a Certificate of Registration can be obtained, it will be necessary for you to obtain a bond in the amount of $100,000, and to file a copy of the bond with the Secretary of State. The Certificate of Registration will not be issued until the Secretary of State acknowledges that the bond has been properly filed. Please contact the Secretary of State to obtain the necessary bond forms at the address below:

Secretary of State Special Filings Unit 1500 11th Street Sacramento, CA 95814

You can also contact the Secretary of State’s Office via the web at: http://www.sos.ca.gov/business/sf/

If you would rather make a $100,000 deposit in lieu of obtaining the bond, you should contact us at the above address for the Attorney General’s Office and we will provide you with the form.

Your application will not be processed until the completed application form, all required documents, and the $850 fee have been received, and the Secretary of State has acknowledged receipt of the bond, or you have made the necessary $100,000 deposit in lieu of the bond.

After a Certificate of Registration is issued to you, you must inform us each time there is a material change in any of the information or documents you supplied with your initial application. Failure to do so can result in the revocation of your Certificate of Registration.

You can obtain a copy of the application form PDF logo [PDF 304 kb / 5 pg] to register as a Mortgage Foreclosure Consultant, and can read a copy of the law to learn important information about additional requirements of the Mortgage Foreclosure Consultant Law. PDF logo [PDF 94 kb / 12 pg]

* Application Form PDF logo [PDF 304 kb / 5 pg]

* Mortgage Foreclosure Consultant Law PDF logo [PDF 94 kb / 12 pg]

Short sale specialists

REALTOR® Magazine-Daily News-Specialists Offer Short-Sale Help

Specialists Offer Short-Sale Help
Short sales now account for the majority of some real estate agents' transactions. To ensure they have plenty of time to list and show properties, many of these agents are working with short-sale negotiators, who spend much of their time on the phone negotiating with lenders on behalf of sellers.

The short-sale process can take six months or more, as the presence of second loans, increased consolidation among lenders, and the large number of short-sale transactions make it more challenging.