During a town hall meeting in May 15, 2009 in New Mexico, President Obama called upon Congress to pass a credit card reform before Memorial Day. Congress complied on May 20, 2009. The Obama mortgage relief act was originally proposed by Obama in March 4, 2009 to help homeowners modify or refinance their mortgage loans. Since public emphasis is current on credit card issues, President Obama has moved on to a second front in order to directly help consumers with reforms.
The couple has tried to sell the house, but there are just no buyers out there who want to pay an amount equal to or greater than the amount of the mortgage. What are the options? One option is to do a short sale. The borrower gets the best price out of the buyers out there, making the contract subject to approval by the lender. Then the borrower has to convince the lender to agree to a contract with a price that is less than the existing mortgage. This can take months, as banks traditionally have been reticent to accept the lower amount, despite the fact that the bank would receive less if the house were sold through a foreclosure sale. If the bank does agree to the short sale, the balance of the mortgage above the sale price is "forgiven."
The effects of such a recession are far reaching, leaving people to worry about what is going to happen next, in their personal lives, as well as being concerned about the future of our country. Over the last year or so it became evident to this country as a whole that change was needed. It started by electing the most liberal President in recent history. The great challenge of overcoming these horrible economical times was placed squarely on President Obama's shoulders. To date President Obama has made many efforts to attempt to better our economy and the results of them our yet to be seen.
New legislation also requires an account review every six months if there is a rate increase and a lower rate should the recent payment history remain timely. Once bills are paid on time then the older, lower interest rates will start to be reinstated. If you have balances with different interest rates on the same credit card payment then payments need to be applied to the balance with the highest rate first. Currently, the credit card companies tend to apply payments to the balance with the lower interest rate.
The 2007 Mortgage Forgiveness Debt Relief Act exempts a borrower from as much as $2 million in forgiven debt. There are several catches with this law. First, the debt had to be acquired before January 1, 2009, so any amount of debt incurred after that date does not qualify for the exemption. Second, the amount of debt had to have been used solely to buy, build, remodel or repair a primary residence. If the borrower took money out of the home equity to pay tuition, medical bills, vacations, cars, downpayment on a second home or investment property, that debt is not eligible for exemption. There is a chance that the homeowners could avoid the taxes if they can prove that they were insolvent at the time. Insolvency means that the total value of the debt exceeds the total assets. This is a tricky proposition, as the amount of insolvency is determined first and if the amount of the debt that is discharged is greater than that amount, there still may be taxes owed. The bottom line is that before a homeowner takes what they think might be the only alternative, that person should check with their tax advisor to determine if there are any tax consequences to the decision.
The couple has tried to sell the house, but there are just no buyers out there who want to pay an amount equal to or greater than the amount of the mortgage. What are the options? One option is to do a short sale. The borrower gets the best price out of the buyers out there, making the contract subject to approval by the lender. Then the borrower has to convince the lender to agree to a contract with a price that is less than the existing mortgage. This can take months, as banks traditionally have been reticent to accept the lower amount, despite the fact that the bank would receive less if the house were sold through a foreclosure sale. If the bank does agree to the short sale, the balance of the mortgage above the sale price is "forgiven."
The effects of such a recession are far reaching, leaving people to worry about what is going to happen next, in their personal lives, as well as being concerned about the future of our country. Over the last year or so it became evident to this country as a whole that change was needed. It started by electing the most liberal President in recent history. The great challenge of overcoming these horrible economical times was placed squarely on President Obama's shoulders. To date President Obama has made many efforts to attempt to better our economy and the results of them our yet to be seen.
New legislation also requires an account review every six months if there is a rate increase and a lower rate should the recent payment history remain timely. Once bills are paid on time then the older, lower interest rates will start to be reinstated. If you have balances with different interest rates on the same credit card payment then payments need to be applied to the balance with the highest rate first. Currently, the credit card companies tend to apply payments to the balance with the lower interest rate.
The 2007 Mortgage Forgiveness Debt Relief Act exempts a borrower from as much as $2 million in forgiven debt. There are several catches with this law. First, the debt had to be acquired before January 1, 2009, so any amount of debt incurred after that date does not qualify for the exemption. Second, the amount of debt had to have been used solely to buy, build, remodel or repair a primary residence. If the borrower took money out of the home equity to pay tuition, medical bills, vacations, cars, downpayment on a second home or investment property, that debt is not eligible for exemption. There is a chance that the homeowners could avoid the taxes if they can prove that they were insolvent at the time. Insolvency means that the total value of the debt exceeds the total assets. This is a tricky proposition, as the amount of insolvency is determined first and if the amount of the debt that is discharged is greater than that amount, there still may be taxes owed. The bottom line is that before a homeowner takes what they think might be the only alternative, that person should check with their tax advisor to determine if there are any tax consequences to the decision.