President Barack Obama is urging the Republican Congress members to cooperate on the implementation of a plan that would extend mortgage loan modifications to three times as many people as are now eligible.
Los Angeles Foreclosure Lawyer Vincent Howard of HOWARD LAW understands the comments were made in one of the president's weekly radio addresses, with the point that the plan had first been presented to Congress back in February. Yet, it remains untouched.
Los Angeles and the entire area of Southern California has been deeply impacted by the nation's housing crisis, and even the president said a full recovery is likely to take years.
As of right now, there are a few measures in place that allow incentives for mortgage lenders to work with borrowers to reduce their principal payments through loan modifications. But those incentives haven't been enough for individuals who continue to struggle.
Republicans are countering that the president's plan will raise tax rolls by somewhere between $5 billion and $10 billion, a cost they say is unjustified as they fear it won't yield significant enough results.
In some areas of the country, housing prices plummeted by as much as 60 percent within the last five years, leaving homeowners unable to keep pace with payments or sell them for anywhere near what they owe.
Creating a further sense of urgency about the matter is the impending expiration of the Mortgage Forgiveness Debt Relief Act. The statute received approval back in 2007 that made it possible for borrowers not to be penalized when their homes were sold in short sales for a lower price than what they owed. Under normal circumstances, the bank will often still write off the difference, but homeowners are charged for it on their taxes as if it was income.
So for example, if you owe $200,000 on a home that's only worth $140,000, and the home is resold in a short sale for the latter amount, the homeowner must file taxes as if they had received an additional $60,000 in income that year. That's a huge burden for individuals who are already struggling to maintain, and the protection that's currently in place will expire at the end of this year if Congress fails to act on that as well.
The bad news is that tax debts typically aren't dischargeable in a Chapter 7 bankruptcy, although there are some exceptions.
The good news is that by working with an experienced Los Angeles foreclosure firm, you may be able to avoid this possibility. Our attorneys are skilled in negotiating lower principal payments with large financial institutions in order to grant clients reprieve from their overvalued homes.
An expansion of the president's Home Affordable Refinance Program (HAMP) could provide additional help.
Last year, Republican Presidential Candidate Mitt Romney had stated that the best way to handle the housing crisis was for the government to step back and allow the market to hit bottom and then recover on its own. In effect, allow it to "run its course."
Obama expressed his disapproval with this tactic, and said that granting greater protections for homeowners who are struggling will serve to boost the overall economy.
Los Angeles Foreclosure Attorney Vincent Howard at HOWARD LAW can help. You can reach us toll-free at 1-800-872-5925 or send us a message online.
Obama talks housing market in weekly address, Sept. 29, 2012, By Gregory Wallace, CNN
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