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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

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INTERIORS

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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.