The Mortgage Foreclosure Debt Relief Act (the MFDRA) has provided relief to countless homeowners, or former homeowners, since it was enacted in 2007. Under the MFDRA, homeowners who received debt relief on their principal residence between 2007 and 2012 do not have to pay income tax on the forgiven debt (normally this debt is taxable). It doesn’t matter whether the debt is forgiven as a result of foreclosure, short sale, or mortgage modification. Debt relief under the MFDRA is quite generous — up to $2,000,000 if married filing jointly, or $1,000,000 if single or filing separately. Forgiven debt is still reported on the tax return, but is exempted from income tax if all qualifications are met. Unfortunately, the MFDRA is set to expire at the end of this year, on December 31, 2012. While both Democrats and Republicans are supporting an extension, each party has their own version of what… read more →
What is Shadow Inventory? And what can it tell us about the housing market, and maybe even the economy? Well, simply put, Shadow Inventory is a fancy way of saying Pending Supply. When analysts talk about the shadow inventory of homes, all they are talking about is how many homes are out there on the market. In other words, they are discussing the pending supply of homes on the market. How can the shadow inventory help us determine what’s going on in the housing market? Well, unless you’ve had your head in the sand for the past five years, you’ve noticed that the country is in a recession, caused, at least in part, by the housing bust. As homes were coming on the market, and buyers were disappearing, the Shadow Inventory grew. According to CoreLogic, in October of 2008, there was a 6-month supply of homes out there. And when… read more →
According to RealtyTrac, last month banks filed 16,318 foreclosure filings in Illinois. That’s a whopping 29% increase in just one month. It’s also a 54% increase over May 2011, a year ago. As RealtyTrac puts it, that’s one house out of every 325 homes in Illinois. In Chicago, that’s one out of every 252 homes. That’s a LOT of foreclosure filings, especially when the real estate market is allegedly improving. For the first time in 17 months, the foreclosure rate increased over the same month the previous year. Are banks catching up on their backlog? Will this large injection of foreclosures create a more favorable market for short sales? It all remains to be seen. Banks could certainly use all the help they can get unloading homes that they are in no position to take care. Last month alone, banks took possession of 54,844 properties nationwide. And the filing rate for… read more →