I have clients who were upside down on their mortgage. They were able to lower their rate through a program called Home Affordable Modification Program, part of the government's broad bail out programs. He says he heard there is a tax credit of up to $1000 per year for five years and then the gov't will reduce the principal on their mortgage by $5000. He stated he heard Pres Obama speak to this shortly after it was started in March of 2009. Anybody know about this? Thanks John
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Classic "I heard someone say something about this". I've heard not ready anything that says they get anymore credit. I think that's something that would have been covered in CE. -
While HAMP does exist, I don't see anything about tax credits.Comment
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Reduced principle
The "credit" they are talking about is a $83.33/month reduction in principle balance for every month a timely payment is made on the renegotiated loan. This credit amounts to $1000 per year for the first five years of the new loan. It is an incentive to make timely payments on the renegotiated loan.
We've just signed papers for a renegotiated loan that had this same provision. There is no credit on any tax return that I'm aware of. The bank will give us credit annually against our loan principle.Comment
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Correct. No tax credit. Watch out for 1099-C in error (TC Memo 2009-239). Look at IR 2099-96, which says Form 4506T-EZ is required.
This is all I know but won't be able to answer any questions on this subject. Good luck.Comment
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