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Patricia Burkhardt
Columnist
W
hat's the difference
between a loan
modification and a
refinance?
A mortgage loan modification
changes the original terms of your
mortgage; a refinance pays off
your old mortgage and gives you
a brand new mortgage with differ-
ent term, rate and amortization.
9 ctrw t de;ie ./
For a loan modification, families do
not have to actually be delinquent
to qualify, but you may have to
show a need for the modification
such as increased expenses, loss
CONIE IN NOW AND
of income, health issues or some
other event that is causing your
ADD NEW LIFE TO YOUR
to the family. The end result is that
you received a reduction in your
mortgage payment, but it was not
the best deal available.
Having an advocate may sig-
nificantly improve your chances in
successfully obtaining a loan modi-
fication and save you much more
money.
My loan was modified in 2009 and
$50,000 of debt was cancelled.
I just received a 1099 Form for
Forgiveness of Debt Income.
Could it be considered income?
If you borrowed money from a
lender and the lender later cancels,
forgives or modifies the debt by
loan modification or foreclosure on
your home mortgage, the Mortgage
HARDWOOD FLOORS.
hardship to make a mortgage pay-
ment.
Forgiveness Debt Relief Act of
2007, enacted on Dec. 20, 2007,
The government is trying to be
as flexible as possible in helping
may allow you to not include any
income from the reduction of debt
DUSTLESS SAND AND
people modify mortgage payments,
so finding an acceptable reason is
REFINISH OR
much easier today. It is much more
difficult and more expensive to
as income. While you may receive
a Form 1099-C for cancellation of
debt income, there is a form that
SCREEN AND COAT.
refinance your home, especially if
your house is worth less than your
mortgage.
needs to be attached to your tax
return to exclude this income so
you do not have to pay tax on it.
You should check with your CPA
or tax preparer to confirm how you
SUPPORT YOUR LOCAL SMALL BUSINESS OWNERS
FAMILY OWNED AND OPERATED SINCE 1971
H
es,4401 FLOORS
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INTERIORS
KEEGO HARBOR, MICHIGAN 48320
248.681.6460
WWW.HARBORFLOORS.COM
HOURS: M-F 8 AM - 6 PM, SAT. 9 AM - 5 PM
OR CALL TO MAKE AN APPOINTMENT
March 18. 2010
me with a loan modification rath-
er than attempt one on my own?
Patricia Burkhardt is managing director
of the Jewish Housing Association
of
Metropolitan Detroit.
complicated; new programs and
guidelines are being released all
the time. Working with an agency
that works in the field and is up-to-
HARDWOOD
REFINISHING
date on all of the most recent pro-
grams and requirements is essen-
LAMINATE
tial to ensuring you receive the best
MARBLE/GRANITE
possible result.
Second, if you are behind on
your mortgage and working with a
mortgage company, the collection
CARPET
department of the mortgage bank
may be attempting to do a work-
CERAMIC
out or repayment plan with you to
get the loan current. If a borrower
CORK
accepts terms offered by the col-
lection department rather than
AREA RUGS
complete a loan modification, the
bank has met its obligation to work
COMMERCIAL
with the borrower and no other
assistance is required to be offered
RESIDENTIAL
1575740
34
should file your tax return to prop-
erly exclude this income.
First of all, the application pro-
cess for a loan modification can be
VINYL
3021 ORCHARD LAKE ROAD
What benefit is there to have a
housing counseling agency assist
JHA
The Jewish Housing Association
of Metropolitan Detroit Inc. is a
nonprofit Michigan corporation
whose purpose is to ensure
that no Jewish family goes
without affordable housing and
to assist the Jewish community
during this time of crisis. For
information, call (800) 458-0404
or apply online at www.jhamd.
org. All services are confidential
and provided at no cost to the
homeowner.