If you have a home listed as a Chester County short sale, you probably know that the housing market has never been the same since hitting its peak back in 2007. Because of the booming market many borrowers chose to have the entire home payment fall under a loan. That meant that when the housing market plummeted many people owed way more on their homes than the home was worth.
That caused the emergence of short sales. A Chester County short sale comes because lenders are faced to sell a home short of the debt against the property. It has made it so that many sellers that are underwater in their home purchase can get out of the home while the bank can still get some of the proceeds from the home. It has served as a great compromise between lenders and sellers.
For many years the Mortgage Forgiveness Debt Relief Act was a huge advantage for sellers who have their homes listed as a Chester County short sale. The act made it so that the discrepancy of income after sale, the money that is still owed after closing, would not be included as taxable income.
For example, imagine that you bought your home for $300,000 and quickly found you were upside-down in the mortgage as the market turned sour. You decide to list your home as a Chester County short sale and end up selling the home for $150,000, well below the amount of money that you paid on the home.
Without the Mortgage Forgiveness Debt Relief Act, the $150,000 that was still owed to the bank must be counted as income and you will be held responsible for the taxes that result for the Chester County short sale. For those who are already in financial hardship, not extending this act could make the Chester County short sale market much different for sellers and buyers alike.