Foreclosure Stories: The End

My mortgage nightmare was coming to an end.

After being deeply underwater as property values in Woodlawn continued to decline, I had made an offer to purchase my condo for $20,000 and found a friend to finance the deal.

Despite the fact that things were falling into place, I was still up against a big deadline.

For the later half of 2012, Congress & the President were at odds over the "fiscal cliff."  One of the consequences of not reaching an agreement was the expiration of the  Mortgage Forgiveness Debt Relief Act of 2007.

The act was set to expire on December 31, 2012.

Part 1:  Foreclosure Stories:  I Stopped Paying My Mortgage

Part 2:  Foreclosure Stories:  Getting Lucky

Part 3:  Foreclosure Stories:  My Mortgage Gets Sold

Part 4:  Foreclosure Stories:  My Is Worth $20,000

Part 5:  Foreclosure Stories:  The $20,000 Loan

Part 6:  Foreclosure Stories:  The End

In plain English, if you had not been formally foreclosed upon, had a short sale, refinanced or reached some type of agreement with your lender before the act expired; you as a taxpayer would be responsible for the taxes on the amount of debt that was forgiven.

Let's say your lender forgave $100,000 of your debt on your principal residence.  In the past, that $100,000 would be considered taxable income.  You'd receive a 1099 in the mail and you would have to pay taxes on that money.

If I have my percentages right, that tax bill might be in the neighborhood of  $30,000.

Finally, someone with common sense (and compassion) realized if you can't pay your mortgage, how were you going to pay a huge tax bill?

What I and the rest of America didn't know was if the Mortgage Forgiveness Debt Relief Act was going to be extended.

If this country was going to go off a fiscal cliff, then my flipping deal wasn't about to go with it.

I had worked too hard to put together this deal.

I couldn't take the chance of falling into debt so deeply I would never find a way to get myself out.  The federal government never forgets and they don't go away.

My luck held out on two counts:  I was able to close the deal before the end of 2012 and the Mortgage Forgiveness Debt Relief Act was renewed.

I recognize the fact I was extremely fortunate on several levels.  I had a mortgage holder who was extremely easy to deal with and I also happened to know someone who was willing to make a substantial loan.

Not everyone has it that easy.

I'm going to be honest with you, I take this as a sign that everything is going to turn around.  My fortune is finally changing.  Frankly speaking, it's about freaking time.

But while we're on the subject, I need you to take away something from this story as well.

Don't do what I did.  Don't just stop paying your mortgage.  As I stated in part two of this series, I've been very lucky.

Damn lucky.

I don't want you to do what I did and find yourself on the streets.

I made an agonizing choice because I had to.

I pray that you never have to get to the point that you have to decide whether you're going to keep your utilities on and eat or keep a roof over your head.

To say it sucks is an understatement.  It's similar to Sophie's Choice, only children aren't involved.

Only your dignity.


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