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Programs for troubled homeowners extended

WASHINGTON — There are a few other things than just the increase in our taxes that Congress was taking care of on New Year's Day. Congress extended some programs that are a vital part of the housing recovery. These programs provide tax relief, short sale incentives and provisions for home loan modifications.

Congress extended the Mortgage Forgiveness Debt Relief Act of 2007. Without the Act, anyone who did a short sale, foreclosure or principal reduction on a home that is worth less than the amount on the mortgage could be left owing the taxes on the difference.

The IRS website offers a simplified example: “You borrow $10,000 and default on the loan after paying back $2,000. If the lender is unable to collect the remaining debt from you, there is a cancellation of debt of $8,000, which generally is taxable income to you.” With the Mortgage Forgiveness Debt Relief Act of 2007, you would not owe taxes on this difference to the IRS. As always check with your CPA or tax professional for details.

Another program that has been saved through Dec. 31, 2013, is MHA, or Making Homes Affordable. If you qualify, this program can lower your monthly payment, get you into a more stable loan, or help you sell your home for less money than you owe.

An option that has an effect on housing is HAFA, or the Homes Affordable Foreclosure Alternates Program. This program gives you options for getting out of your upside down housing situation or mortgage you can no longer afford by allowing homeowners to do a short sale or a deed in lieu. If you qualify, HAFA will give you less of a negative effect on your credit and may give you up to $3,000 in relocation assistance.

Another option is HAMP, or the Homes Affordable Modification Program. This is a program that will allow you to stay in your home and modify your mortgage. This program may allow you to lower your monthly payment to make your mortgage more affordable.

If you are interested in any of these programs or learning about what options are right for you, visit the Making Home Affordable web site at

If you are having problems with your mortgage you can speak with an HUD approved housing counselor at no cost at 1-888-995-HOPE (4673).