Debt foregiveness point!

By
Real Estate Agent with Realty One Group
I am monitoring the short sale increases in Orange County and i think the debt foregiveness law passed is giving people license to short sale out of a house in a falling value neighborhood.  I know a couple who live together, she is getting a new house in her name and he is short saling out of the house they are in because the dont want to pay the higher mortgage because the values have plummeted in their community.  I cant help but think this new law may encourage more people to do this and drive the market down even more... what do you think?
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Rainer
102,732
Robert Huntsinger
Empire Realty - Upland, CA
Empire Realty Upland, CA - Full Service at a Discount

Angela,

Yup people that are upside down but can still afford their home will choose to move on to lower payments.

Take care!

RJH

Feb 23, 2008 11:14 PM #1
Rainmaker
536,368
Lynda Eisenmann
Preferred Home Brokers - Brea, CA
Broker-Owner,CRS,CDPE,GRI,SRES, Brea,CA, Orange Co

Hi Angela,

What do I think, I think you are correct in your analysis. We saw the same thing before in the 90's, back then even without the ability of debt forgiveness. While the change helps some, sorry to say others abuse it.

Feb 23, 2008 11:14 PM #2
Rainer
11,962
Angela Burton
Realty One Group - Mission Viejo, CA
Real Estate Professional

Yes its sad that people abuse these things designed to help people in a jam..  I have been in Real Estate for 5 years so i havent seen a change in the market like this before, i look forward to getting the benefit of all of you more experienced Realtors out there to keep me right!

Thanks

Feb 23, 2008 11:22 PM #3
Rainmaker
318,622
Rosalinda Morgan
Brookville, NY
"The Rose Lady"

Angela,

Debt forgiveness should be a taxable income because some people will abuse it which is not the reason why they passed the law.  It is to help people who is having difficuly making their mortgage payments.

Feb 23, 2008 11:46 PM #4
Ambassador
2,033,613
Todd Clark
Keller Williams Realty - Beaverton, OR
Broker - Beaverton, Oregon Real Estate Expert - (503) 524-9494

I think it is a good idea, but there has to be a lot of checks and balances put in place first. I don't like the government involved in my life too much, but there has to be a happy middle ground and I'm not sure this is it as it is being presented. I like the idea of a new loan being put in place at the lower value of the property and that brings the payments down. But, then if they sell it in the future, any profit made from the sale goes to the mortgage company that took the loss in the first place to the point of the original loan.

Welcome to the rain and hope you end up enjoying the rain as much as I have,

Feb 24, 2008 12:20 AM #5
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Rainer
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Angela Burton

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