The new bill makes cancellation of debt of up to $2 MILLION on COD on a primary residence? Does anyone else have a problem with this figure? I mean, I have a problem with the whole concept, but 2 million??? Even in the extremely affected highly inflated area in which I live (Sacramento, CA) housing prices aren't dropping that much! Eddie Murphy's ex-wife had to cut the price of her mansion by a few mill, but I doubt she had COD resulting from it. And if you do have COD of that much, I don't want to subsidize it. Now think of this scenario....you had a home worth $2.5 million in San Diego with a mortgage of $2.5 million on it that burned to the ground in the fire. The land was worth the half million. You decide not to rebuild and walk away with an insurance check for 2 million. The bank gets the land worth a half million and you have COD for 2 million. No consequences except your credit is ruined. You move across the border to Mexico and retire in style.
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Don't Count on the $2 million
The bankers and the casualty insurers aren't going to let you walk away with a check for $2 million when you had zero equity in a property with $2 million of improvement built on the land. Think about that. If they were willing to let that happen, then the arson crime rate would be much higher than it is. -
If the property has a mortgage on it, the mortgage company is going to require that it be insured. So, if the property is destroyed, they will be party to the insurance proceeds. At the very least, the check would be made out to the homeowner and the insurance company.
When we filed a claim to have our roof replaced due to hail, the check was made out to us and the insurance compamy.
This law is really in refernce to homes that are foreclosed on. So, if there is COD on the foreclosure, the homeowner can exclude that from their income.
I really don't know how much effect this will have. In quite a few states, debt to purchase a primary residence is considered non-recourse debt already. So, the homeowner already would not have COD income. But, this can vary by state.You have the right to remain silent. Anything you say will be misquoted, then used against you.Comment
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Just because they require insurance
doesn't mean there is.
One of the nice side benefits to the 80/20 no down payment loans is their is no escrow requirement.Comment
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2 million
OK, so my middle-of-the-night outrage scenario wouldn't work. But still....up to 2 MILLION in debt relief w/no tax? Which of our duly elected representatives snuck that figure in there?Comment
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The Chairman of the House Ways and Means Committee - good old Charlie.Originally posted by joanmcq View PostComment
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