| If you did a loan modification, short sale or had a | | | | A foreclosure is when you are no longer making |
| foreclosure in California last year than you were | | | | payments on your home for a reason. The |
| probably one of the many that were afraid to file | | | | creditor will send many notifications to |
| your 2009 state taxes. Up until April 12, 2010 the | | | | communicate with you to make other |
| Mortgage Relief Act had not been extended after | | | | arrangements. After a certain amount of time has |
| 2009. Most people were expecting to not have to | | | | passed without payment the creditor will proceed |
| worry about paying any taxes for their deficit. | | | | with taking back the property through the courts. |
| A loan modification is when the terms of a loan | | | | By the date of the announcement an unknown |
| are changed. Many people try this option first | | | | number of people had already filed their taxes. |
| when they begin to realize that they may not be | | | | Those people may need to file an amended state |
| able to afford their mortgage payment soon. You | | | | tax return. When you make the necessary |
| contact the lender and discuss restructuring your | | | | changes you must remember to write "Mortgage |
| loan to better suit your budget constraints. This | | | | Debt Relief" in red at the top of the form. |
| may mean a lower interest rate or extending the | | | | If you waited until the last minute to file your |
| length of the loan. | | | | taxes because you knew that the state had not |
| A short sale is when you can no longer afford | | | | extended the Mortgage Forgiveness Debt Relief |
| your home and your bank is willing to accept less | | | | Act than you were probably ecstatic when you |
| than the balance you owe on your home loan. | | | | realized that, low and behold, California decided to |
| Usually, you need to show the lending institution | | | | extend the act through 2012. At midnight on April |
| that you are financially strained. They will probably | | | | 12, 2010 the announcement was made that |
| send you a packet of paperwork that will need to | | | | people who had a loss that was forgiven would |
| be completed. This is better than going through | | | | not have to pay any taxes on that amount. |
| the process of a foreclosure. | | | | |