There is a catch, you do have to qualify. These are the qualifications:

1. You had to be in the foreclosure process between Jan 1, 2009 and Dec 31, 2010.

2. Your loan must be with one of the 14 participating lenders.

3. The property securing your loan must have been on your primary residence.

This review is open to any homeowner who experienced the foreclosure process in any way over those two years, subject to the three qualifications above. But that includes any homeowners who completed loan modifications, those who didn’t complete modifications, homeowners who sold their homes via short sale, and homeowners who were foreclosed on and lost there homes, some while still trying to modify their loans or trying to sell their property.

This independent review will give those homeowners a chance at redress for the wrongs committed against them.

I would advise that you talk to an attorney prior to making your application for review. You only get one chance. Make it count.

- Zach Shepard

Click here to read the press release directly from the Federal Reserve.

Click here to go directly to the Independent Foreclosure Review website and FAQ.

Click here for a little more info about the extension from an actual reporter.

For a quick recap of the law, the MFDR Act allows homeowners who sell their primary residence via short sale, or lose their home to foreclosure, to be able to write off or exclude the mortgage debt forgiven in the sale on their income taxes. Normally if debt is forgiven, on a loan or credit card for instance, the borrower would have to declare the amount as taxable income on this tax return for the year, then pay their tax bracket on that amount.

Obviously, if a homeowner wants to sell their home but they incur a six figure loss on the loan, that will force them into a more difficult situation, such as bankruptcy or foreclosure. The MFDR Act allows homeowners to write off those loss amounts and move on with their lives.

The Act only applies to debt on primary residences. For investment properties, you would have to claim an exclusion, such as insolvency, in order to write off the amount of debt forgiven.

For more information, check out the Act directly on the IRS’s website: http://1.usa.gov/JGuun

- Zach

After a short sale, I always try to recommend to clients to take two minor but significant steps to grab hold of their finances: use Mint.com, to help control their budget, and sign up for a credit monitor, like FreeCreditScore.com.

The Mint.com website is set up like a financial dashboard for your personal finances. It shows you where your money is going, where your money is coming from, and gives you suggestions on how to control it and budget it. But that’s only if you want to listen to their advice. The ‘financial dashboard’ is rundown of all your accounts: checking and savings balances, credit card balances, loans for your house, car or loans from Mom & Dad, even CDs or Money Market Accts. You can include the value of your house versus the balance of your mortgage to see how much equity you have. And once you start doing this for a period of time, you begin to see a historical perspective of your finances.

And FYI, Mint.com only stores your financial information. You can’t actually move around money in the site itself, its only used as a recording manual of sorts. I highly recommend it. By the way, Mint is free to use.

The next item is the monthly credit monitor. I’ve been using FreeCreditScore.com for almost five years, and I’ve seen my scores go up and I’ve seen ‘em go down. The service is $12 mo, and its easily worth it. I receive a monthly email showing my credit history, how many ‘pulls’ I’ve had that month, what my ‘debt to credit limit ratio’ is, basically everything that I would like to know about my credit, how it reports and most importantly, how it affects my score. If my credit score jumps by 20 points, I get an email notification. If someone pulls my credit, like my bank or for a loan application, I get an email.

Now I admit, most of us get these credit score offers from our credit card companies and they seem like a BS waste of time. But the knowledge of how your credit score works is worth a few bucks on my credit card a month.

Plus if you just happen to call in to their customer service, and just happen to mention that you wanted to refer them to several of your friends, maybe just maybe they’ll give you a discount off that big $12 monthly fee. Ha I did.

Hope this helps. Good luck!

- Zach

We’ll be bringing you a number of tips and things to watch for in your short sale process, as well as what to expect as the market fluctuates.  Get in touch with us today with any questions you have!