Program Will Pay Homeowners to Sell at a Loss (Free money for deadbeat 'homeowners!)

nyt | 3/08/2010 | david streitfeld

[milwguy]

For the administration, there is also the concern that millions of foreclosures could delay or even reverse the economy's tentative recovery -- the last thing it wants in an election year.

Taking effect on April 5, the program could encourage hundreds of thousands of delinquent borrowers who have not been rescued by the loan modification program to shed their houses through a process known as a short sale, in which property is sold for less than the balance of the mortgage. Lenders will be compelled to accept that arrangement, forgiving the difference between the market price of the property and what they are owed.

The problem is highlighted by a routine case in Phoenix. Chris Paul, a real estate agent, has a house he is trying to sell on behalf of its owner, who owes $150,000. Mr. Paul has an offer for $48,000, but the bank holding the mortgage says it wants at least $90,000. The frustrated owner is now contemplating foreclosure.

To bring the various parties to the table -- the homeowner, the lender that services the loan, the investor that owns the loan, the bank that owns the second mortgage on the property -- the government intends to spread its cash around.

[milwguy]

OK, here is more wisdom for the 'genius' Obama First: You bought more home than you could afford, but that's ok because it was in the mid 2000's and home prices were going up, up, up. Second: You found yourself a 'little' strapped for cash because you bought more house than you could afford, so you took out a home 'equity' loan because the home you bought a couple years ago was 'worth so much more' than you paid for it. Third: Instead of using the home equity loan to help offset the monthly costs of the home you bought which you couldn't afford, you went out and blew the cash on a big screen tv, a new car, and other 'cool stuff' Fourth: The 'chickens came home to roost' Now you had a house you couldn't afford, AND a home 'equity' loan which you blew and also can't afford. Fifth: Your mortgage holders got a little pissed when you stopped paying both your mortgage and your home 'equity' mortgage (or line of credit). Sixth: After awhile the 'evil' bank decided to foreclose on your sorry behind for not paying them, and you appealed to Barack the Magnificent and Barney the Ass Clown to save you. Seventh: Barack the Magnificent decides to use some of his 'stash' to ease the pain of your being booted out of your crib. Finally: The taxpayer is left with paying the bank, the second mortagage holder, and YOU for the bad decisions YOU made in buying more house than you could afford. Does everyone understand how those of us who have been responsbile, bought the house they could afford, and paid their bills on time, are being screwed for our good behavior? The gov't is rewarding the bad while punishing the good?

[milwguy]

I forgot to post the most important paragraph!~~~

Under the new program, the servicing bank, as with all modifications, will get $1,000. Another $1,000 can go toward a second loan, if there is one. And for the first time the government would give money to the distressed homeowners themselves. They will get $1,500 in “relocation assistance.”

[WOBBLY BOB]

[MrB]

So, will they have to report the difference as INCOME on their tax returns?

[mylife]

Screw the banks. That should work well to stimulate the economy.

[ml/nj]

"compelled"

Such a nice word for us in the United States of America.

ML/NJ

[C19fan]

And for the first time the government would give money to the distressed homeowners themselves. They will get $1,500 in “relocation assistance.”

In places like Florida, you can live "rent free" in your house for 1 to 2 years while your loan goes through the Foreclosure process. $1,500 is pocket change.

[bergmeid]

Do you have a working link to the NYT article please? I’d like to read the whole thing.

[HiTech RedNeck]

Knowing this gummit, yes.

[HiTech RedNeck]

But, the bank will be able to count it as a loss on their taxes.

[votemout]

Currently, there is not tax on the debt forgivenss for short selling your personal residence.

[17th Miss Regt]

Yep. Nothing changes with that part of the deal - a fact they won’t apprise homeowners of until after it is too late. But then again, they can always open debtors prisons.

[Buckeye McFrog]

sounds like the Barney Frank mortgage cram-down program thru the back door (except in Barney’s plan the homeowner does get to stay in the house)

[Grampa Dave]

Interesting.

Is there any links to the specifics like limits on home values?

[milwguy]

http://finance.yahoo.com/real-estate/article/109009/program-will-pay-homeowners-to-sell-at-a-loss?mod=realestate-sell&sec=topStories&pos=3&asset=&ccode=

[milwguy]

sorry, I was so incensed by this BS I forgot the link, lol

http://finance.yahoo.com/real-estate/article/109009/program-will-pay-homeowners-to-sell-at-a-loss?mod=realestate-sell&sec=topStories&pos=3&asset=&ccode=

[mylife]

the economy's tentative recovery

Tentative recovery? I thought the O saved us all. The recession is over /s

[votemout]

http://www.irs.gov/newsroom/article/0,,id=174034,00.html

[texteacher]

“So, will they have to report the difference as INCOME on their tax returns?”

My guess is “yes.”

[Irenic]

Hmmmmm...I wonder....

What about people who used a credit card to purchase items that aren’t worth what they paid for them and now the interest rates have risen, making them further upside down?

Could those people sell the things they bought with credit cards, then give that money to the bank— whatever they recouped and call it even?

What’s really the difference?