seth caplan

Misinformation From Fannie and Freddie On Walking Away

To Whom It May Concern- below is an email i sent to the Kenneth Harney a columnist who wrote an article quoting the mis information regarding walk aways.



I thoroughly enjoyed your article that I read in yesterdays Los Angeles Times Real Estate Section; however I have a few questions regarding a few parts of the article titled WARNING: WALKING AWAY WILL BE COSTLY. My question is in regards to the part in the article that deals with LOAN MODIFICATIONS AND HAVING NO TAX ON THE AMOUNT FORGIVEN vs. WALKAWAYS, BY CONTRAST, HAVE NOTHING FORGIVEN AND THE IRS MAY DEMAND INCOME TAXES………….ACCORDING TO MIGALA

My understand of the recent law changes allowing for non payment for tax on mortgage debt relief is as follows- if the debt that is forgiven is acquisition indebtedness or a refinance loan, as long as the amount forgiven is not on a refinance loan taking cash out (regardless of owner occupancy vs. non owner etc etc) then there is no tax. Only if the loan is a refi and there is cash taken out and then there is non payment of any part of the cash out then the tax payer will be responsible for tax on debt relief.

In your article you make the assumption that a loan modification is either an actual loan modification of the monthly terms or possible a loan modification allowing for a short pay/sale- thus no tax on debt relief. However if none of the previous takes place then the borrower that gets foreclosed/walks away will be taxed- with no mention of purchase money, cash out, recourse non recourse etc etc.



Does my misunderstanding make sense? I feel that I have a very deep understanding of the aforementioned issues but your article brings up possible issues and scenarios I did not consider as relevant.

i believe that the mis info on the above mentioned issues is done on purpose to try and further confuse borrowers into continuing to pay regardless of there situations.

Can you possible shed more light on my above confusion? Are you available to talk by phone about the above? Can you put me in contact with Mrs. Migala from Freddie Mac?



Thank you in advance for your help,

Seth Caplan