Second Homes And A New Stress

[Jun 9, 2008.]

 

A lot of attention is being paid to foreclosures on a large scale. New reports come out each month following the state of the housing market and how many home owners are expected to drop into foreclosure. What is not closely reported are the numbers of home owners facing foreclosure on multiple properties.

The housing boom encouraged investors to buy a second home. These homes were used as vacation properties, rental properties, or were bought with hopes to flip the house and make a quick buck. When the sub prime mortgage collapse occurred those home owners found themselves in a pickle.

The government passed Mortgage Forgiveness Debt Relief Act which helped countless homeowners with some tax relief but this does not cover second or third homes. It is estimated that there are over 7 million vacation homes and no telling how many of these homes are facing foreclosure.

Several owners are unable to keep up with both home payments and as a result are facing foreclosure. Should this occur those owners will be faced with an incredible amount of taxes which would be forgiven under the Mortgage Forgiveness Debt Relief Act.

Many home owners attempt to refinance against the equity of these homes but realize that the value of their homes is no longer sufficient to cover the costs. What’s more lenders are now being very careful about who they extend a line of credit too so bank loans are pretty much out of the question as well.

All these home owners can do is attempt to sale or rent out these properties. The sad fact is that many owners with more than one home will face foreclosure and will be racked with taxes driving them further towards bankruptcy.

The resulting tax bill from foreclosure on a second home will be devastating to many owners. Experts are really unsure of how to deal with this problem but suggest talking with the lender for any advice or suggestions to your particular problem.