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I keep hearing commercials for mortgage loan modifications. I am wondering if there is anyone who has used one of these firms or companies who would share their experience with me. I have had some success with these modifications, but they are very unpredictable so I wonder how these firms can advertize that they can get results.

On NBC this morning they had a segment on property taxes. Later in the morning someone emailed me with a question that actually was on the same subject. This is the time you need to consider the objection to your assessment. It is the most certain way to lower your home payment. I have done this myself and it works.

Currently I am seeing two factors at work in the modification process:

1. Trial modifications that are now being denied permanent status by the lender.

2. Great uncertainty as to what the current rules are.

My feeling is we are building toward a crisis of some kind.

The credit industry has lately sent out misinformation about what effect bankruptcy has on student loans and employment. Title 11 section 525 prohibits lenders from considering prior bankruptcy filings in regard to loans which are part of the goverment student loan program, and it also prohibits private employers from considering bankruptcy in regard to employment. Nevertheless the NBC Today show experts warned about the effect of bankruptcy in both regards without mentioning the legal prohibition against such discrimination.

I have seen quite a few loan mods under HAMP that is the government supported program. They all have one thing in common the refusal of the borrower to take no for an answer.

Among the absolute worst things to do is to borrow against a retirement plan to pay off unsecured debts such as credit cards. This occurs to me now because the clients I saw today all did this. It hurt them in different ways. Several reduced their take home pay so much they had trouble paying mortgages and car loans. But the last person of the day lost his job after the loan from his 401k and was unable to pay back. He now has a big tax bill. Never borrow from your 401k to pay debts I have never seen a good result.

There is no tax on a mortgage foregiven in a bankruptcy, but there may be no tax on a home mortgage foregiveness after 2007 which is when congress passed the Mortgage Forgiveness Debt Relief Act. Before you pay taxes on 1099 income for a short sale chech and see if you are eligible for this relief.

More and more homeowners are coming into my office with the papers for a foreclosure action when they thought they had just negociated a motification of their mortgage. The reason for this is that the foreclosing attorney is never notified about the negociations for a modification. Some form of answer needs to be filed or the foreclosure may stand. So beware the Bank may be saying modification while its attorney is foreclosing.

Around this time of year people start coming in with 1099 tax forms which they received from former creditor. The tax prepares and accountants insist that this is income from a forgiven debt, but it is not. When an insolvent person is given debt foregiveness or files a bankruptcy and discharges debt no taxable event takes place. The IRS form that would be filed is #982; it provides that in the case of a secured debt being discharged the future basis of the property involved is reduced by the amount forgiven. Most tax payers are uneffected by this last provision, but still need to report the 1099 and declare that it is in fact not income.