Comments on: Mortgage Forgiveness? Not So Fast

By: glenn

glenn — Mon, 30 Jun 2008 18:53:37 +0000

Are there answers to this question. This is my primary home, I rent another for work related reasons in another state. I do not rent it out nor would I. I am however looking at a house that was worth $320K, I have $250 financed and it is now worth maybe $140K. House is in Cape Coral, FL

By: glenn

glenn — Mon, 30 Jun 2008 18:50:59 +0000

I am wondering if the Lender would considering “forgiving” the downside of the loan to the original owner at a slight premium to market value so he can keep his home? Or is this what the bill states?

By: Dennis Haber

Dennis Haber — Mon, 30 Jun 2008 12:19:10 +0000

Inherent in the reverse mortgage rules is a special concept of no personal liability. Whenever the “upside down” event occurs (the amount due is greater than the value of the home at time of sale), under the FHA requirements, the
lender will look to the government for the difference. Under the proprietary program, the lender will take the loss. The HECM (FHA) program requires mortgage insurance to cover this eventuality. The proprietary program today are offering lower LTVs, to prevent the crossover point from being reached.

By: Paul Gellert

Paul Gellert — Sun, 29 Jun 2008 14:35:39 +0000

I am writing an article on Reverse Mortgages. The question is, in the event the house is worth less than the mortgage at the time of death or sale, is the forgiven amount taxable under the reverse mortgage rules? If it is, am I correct that the Mortgage Debt Forgivness Act would cover it?
Thanks.