According to a preliminary report released by LPS, 2,060,000 properties are in foreclosure inventory. As of the end of the 2011 fourth quarter, 11.1 million borrowers were reported to be underwater, according to CoreLogic. That’s a lot of potential debt to be forgiven, and through the Mortgage Debt Relief Act of 2007, homeownersget a break from paying taxes on their forgiven debt – whether it was forgiven through a short sale, foreclosure, or a modification. The act though, is set to expire at the end of this year. “The scheduled expiration of the mortgage debt relief law means a whole lot of uncertainty for a whole lot of underwater homeowners who are in the process of foreclosure,” said Lance Denha, Esq., of the Law Offices of Lance Denha. If extended, this could lead to thousands in savings for the individual borrower. For example, depending on one’s tax bracket, every $10,000 in forgiven debt could incur as much as $1,500 to $3,500 in federal taxes. Thus, if $100,000 in mortgage debt is forgiven after a foreclosure, this could mean $15,000 to $35,000 in taxes owed for the borrower. The Law Office of Lance Denha warned that rushing to hand over a deed before the December 31 expiration date could become a mistake though if Congress ends up extending the debt relief act, which it may. “Obama did include it in his budget, to extend it to 2014,” said Mark Luscombe, a principal analyst for tax research firm CCH, in a statement. “Congress….. might decide it’s not as crucial as extending the tax breaks that already expired at the end of last year.” That doesn’t mean Congress won’t eventually act to extend the relief, Luscombe said. “Usually the only fight about these things is finding a way to pay for it,” he said. The administration is proposing to extend the act until January 1, 2015. The criteria to have forgiven debt excluded as taxable income is the debt must be from a primary residence and the debt must be used to buy, build or substantially improve a primary residence. Also, the exclusion applies only to acquisition debt up to $2 million, or $1 million for married taxpayers filing separately. —Provided Courtesy of www.dsnews.com—The Law Office of Lance Denha is a multistate law firm that helps defend wrongful foreclosures against homeowners.
Rumors that there could be an extension of the Mortgage Debt Relief Act of 2007!
Beliefs That Break Your Business
Belief 1
It takes money to make money
Have you ever thought to yourself, “If I had money to invest, I would start today!”? I’ll tell you right now, I have… In fact, that notion alone kept me out of this business for six years. I kept thinking to myself, “I’ll just work harder, earn more money, save more money, and then someday I’ll be able to start investing.”
It took me six years to realize that money was not the problem. Sure, if you have money, it can be a resource to help you get a good start, but that’s not the only way. If it were, that would be a pretty sad reality for Sally, the schoolteacher who dreams of getting out of the classroom and into real estate investing. Our society is paralyzed with this self-defeating belief that the only way to make money is to have it to begin with.
Think about this logic for a moment. “I have no money. All I have is this nine-to-five job, which is either unfulfilling or not very fruitful financially. So I guess I’ll just put more time into this job, hoping it will eventually get me to where I want to be.” Do you see the problem there? Einstein said, “The significant problems we face cannot be solved at the same level of thinking we were at when we created them.” In other words, if you keeping doing what your doing, you always get what you’ve got! If you don’t like what you’re doing, then you have to spend time doing something else, or nothing will ever change. Don’t add more hours of what you’re currently doing so that someday you can go do something else. That makes no sense. You don’t have to be Einstein to see that.
So what is the real problem then? Aside from false beliefs, the real problem is knowledge—how to make money without having money. This is what I teach people to do. I teach them how to invest in real estate with little to no money down. And no, it’s not through financing, lease optioning, double closing shorts sales, or wholesaling. There are ways to secure and own real estate without doing any of that, with little to no money down.
Let me share a quick story. When I got started investing I belonged to a small investment mentoring group. The mentor was one man and he was brilliant. Taught me what I needed to know to get started with little to no money. One of my colleagues in the group had a “sponsor”, called rich dad. I thought you know I wish I had a rich dad! That would make this whole thing a lot easier. This just fed my false belief of, “takes money to make money”. Let me tell you how this story ended. My friend lost his rich dad’s money and I made a lot from nothing. The reason why is because I had to LEARN (knowledge being the real asset here) how to negotiate a better deal simply because I didn’t have the money to pay too much. Unfortunately my friend did and he relied on his check book to close deals. He didn’t have to learn to negotiate cause he always had enough money. Is money really the answer to your problems? It in fact is not, it will actually amplify your problems if you had it, without first knowing how to use it.
Problem is when you realize, “I guess I didn’t know enough”, you have already lost your money. That is a bigger problem to have. I am telling you I would rather be ignorant and broke then ignorant with money. I don’t care how you slice it, more money will not solve your money problems.
Now in regards to doing deals with “little to no money down”, I can probably guess your next thought. “If there’s only a ‘little’ money down, there will only be a ‘little’ profit.” Gotcha! There’s that false belief poking its head in the door again! This is about using a little money to make big money.
The only thing that stands between you and this possibility that seems so impossible to most people is the know-how. If you have the knowledge to structure it, the knowledge overcomes the money problem. So there you have it. With a different set of knowledge and beliefs, you can make that quantum leap to get to where you can lose that nine-to-five job and pay your bills with real estate.
A thought by Jack London….
I would rather be ashes than dust!
I would rather that my spark should burn out
in a brilliant blaze than it should be stifled by dry-rot.
I would rather be a superb meteor, every atom
of me in magnificent glow, than a sleepy and permanent planet.
The function of man is to live, not to exist.
I shall not waste my days trying to prolong them.
I shall use my time.
The Difference Between Dreaming and Doing
The other day, a man said to me, “I wish I had a business like yours.” And I thought, “So? What’s stopping you? It’s not like this business was dropped into my lap by a winged horse from Mt. Olympus.” I once heard a tenant say about his landlord, “He has the cushiest job. He just collects rent checks and does whatever he wants.” I would say to that tenant, “Have you ever thought to ask him how he got there? Have you ever observed his behavior? Have you ever thought to follow his success trail?”
What is the point of making wishes if you aren’t going to act on them. So many people daydream about their lofty hopes for the future, and when they don’t realize those hopes and dreams, they think they’ve failed. The truth is, they didn’t fail. They just didn’t do anything.
Here’s a little fable for you. Jack and Jill went up the hill to that swanky Chinese food place at the top for lunch. After a very satisfying meal, the two eagerly broke open their fortune cookies to see who got the better fortune. To their utter amazement, they got the same fortune! It read: Today is a very lucky day for you. You will make a new friend. They both tucked away their fortunes and smiled in anticipation. “I wonder who my new friend will be,” said Jack. “I wonder who my new friend will be,” said Jill.
After lunch, the two parted ways, each carrying their little fortune in their pocket. While Jack was trotting along beside the pond, he came across a boy who was skipping stones across the water. Jack thought to himself, “Hey! This could be my new friend.” So Jack stood there and watched and waited for a while, but the boy didn’t even turned around. “Well, I guess not,” said Jack to himself, and he went on his way.
Nearby, Jill was picking daisies by the road when she saw a boy skipping stones across the pond. She went over to see how he was doing it and thought, “Hey! This could be my new friend.” So she tapped the boy on the shoulder and said, “Do you mind if I skip stones with you?” The boy said it was fine with him. The two skipped stones all afternoon and became very good friends.
At the end of the day, when Jack was putting on his PJs, he found the fortune in his pocket and crumpled it up saying, “Dumb things. They never come true.” Jill stuck hers on her mirror and said, “I’ll have to get me some more of those.”
The best way to predict your future is to create it! That’s the difference between a realist and an optimist. A realist says, “I’ll believe it when I see it.” The optimist goes out and creates it.
Creating takes a bit of believing without seeing. Not too long ago, I got an email in which someone said to me, “I’m willing to do whatever is necessary if I can see there’s an opportunity there.” That’s backwards. You have to believe there’s an opportunity there and move forward in order to “see” it in reality. If you need proof before you can act, then you’ll never get anywhere.
You’ve got to have a little faith. Remember today is not yesterday, and tomorrow is not guaranteed. All that we have is today. Don’t be discouraged by yesterday or afraid of tomorrow. If you tried something and it didn’t work, try something different. But always remember that YOU are not your results. If something fails, YOU are not your failure. You have to believe that you are worthy of your goals, but not that your success or failure dictates your worth.
We need to be creators. It’s an inborn instinct. There are really only two forces in this world: destructive forces and creative forces. You are either a maker or a taker. Think about your relationships for a minute. How do you approach them? Do you approach them with the attitude, “What can I get from this?” Or do you come with the attitude, “What can I give to this?” Interestingly, when we bring a “Give To” attitude to the table, we almost always ending up getting what we want. Always approach business with a “Give To” attitude. Not only will you be more successful, but you will positively impact the lives of those around you. So have a little faith. Stop daydreaming. Start doing. And always GIVE.
