Thoughts?In 2012, Dietrich represented a service member whose house was wrongfully foreclosed on by the individual's mortgage lender in 2009. According to Everett Maynard, Jr. attorney at law, who nominated Dietrich for the award, the mortgage lender failed to obtain a court order to seize the house, as required by the Servicemembers Civil Relief Act, while the service member was deployed. In response, a settlement was paid in the amount of $350,000 to the service member, along with a Form 1099-MISC.
The service member had his taxes correctly filed by a commercial tax service, and because the settlement was filed with a Form 1099-MISC, it as designated as a monetary gift and was counted as taxable income. He was then obligated to pay federal and state income taxes of approximately $100,000 on the settlement amount.
Mortgage settlements
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- A Councilor of the Kabosh
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Mortgage settlements
http://www.army.mil/article/95421/
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- Tupa-O-Quatloosia
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Re: Mortgage settlements
At first glance, it should, in part, be considered reimbursement for the foreclosure loss (if there was a foreclosure loss), which would be a non-deductable loss (even if not capital), so that part shouldn't be taxable at all. I don't know if I would have thought of capital gains treatment, even though the settlement was related to real property. (Since he was apparently deployed at the time of the foreclosure, does anyone know what happened to his personal possessions? Casualty loss?)
Does anyone remember the tax treatment for restructuring of loans? It has probably changed this year, and I haven't had any clients in that position in 2012.
That being said, foreclosing on a serviceman on active deployment is despicable, even if it were legal. [Sorry if that's too political for the forum.]
Does anyone remember the tax treatment for restructuring of loans? It has probably changed this year, and I haven't had any clients in that position in 2012.
That being said, foreclosing on a serviceman on active deployment is despicable, even if it were legal. [Sorry if that's too political for the forum.]
Arthur Rubin, unemployed tax preparer and aerospace engineer
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- A Councilor of the Kabosh
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Re: Mortgage settlements
One of the reasons I am interested is that a friend of mine was transferred from his Federal post outside Baltimore to the computer center outside Kansas City, MO. When he did so he was upside down on his mortgage thanks to the value tanking and went through a short sale. When the sale went through around $100k was wiped clean but he received (I believe, cant quite remember how it worked) income in the amount that was absolved. Which he ended up paying taxes on. Not sure if it is the same sort of issue but would be interested to see if it was wrong.
I also agree on foreclosing on an active serviceman. A Lt. in my old unit had his house foreclosed on while he was behind enemy lines during Desert Shield. So he got to come back to not only his house gone but his wife and kids gone also. That was years before the serviceman protection act.
I also agree on foreclosing on an active serviceman. A Lt. in my old unit had his house foreclosed on while he was behind enemy lines during Desert Shield. So he got to come back to not only his house gone but his wife and kids gone also. That was years before the serviceman protection act.
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- Supreme Prophet (Junior Division)
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Re: Mortgage settlements
That's strange, because the Soldiers and Sailors Civil Relief Act dates from 1940; and when I was doing foreclosures, I had to certify that the Act didn't apply when I filed the papers.JamesVincent wrote:One of the reasons I am interested is that a friend of mine was transferred from his Federal post outside Baltimore to the computer center outside Kansas City, MO. When he did so he was upside down on his mortgage thanks to the value tanking and went through a short sale. When the sale went through around $100k was wiped clean but he received (I believe, cant quite remember how it worked) income in the amount that was absolved. Which he ended up paying taxes on. Not sure if it is the same sort of issue but would be interested to see if it was wrong.
I also agree on foreclosing on an active serviceman. A Lt. in my old unit had his house foreclosed on while he was behind enemy lines during Desert Shield. So he got to come back to not only his house gone but his wife and kids gone also. That was years before the serviceman protection act.
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- El Pontificator de Porceline Precepts
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Re: Mortgage settlements
As many of you know, the mortgage foreclosure industry can be very sloppy. I am not surprised that someone forgot to check to see if the obligor was in the service and deployed.
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Re: Mortgage settlements
From what I understand is unless there is an active notice in the file, they don't always check. Maybe someone with scruples does. A lot of times they just send notices to the address on file and if no one answers, foreclosure time. What happened to the Lt. I was talking about was he transferred to England to work with the British during the lead up to Desert Shield. While he was there his pay was sent to the Quartermaster there. When he was sent behind lines in Kuwait his pay was "supposed" to be direct deposited, but it never left being sent to the Quartermaster so when the money ran out in the account they foreclosed. He was an intelligence officer at the time and was working with Kuwaiti resistance to help pave the way for Desert Storm. His wife received the letters, figured he stopped paying his bills (since he didn't call) and left him and took his kids and never answered them. So he comes home to no house and no family.
IIRC there were so many loopholes and angles involved in the 1940 act that they did an entire new one that expanded and updated it.
http://www.jag.navy.mil/legal_services/ ... 20SCRA.pdf
IIRC there were so many loopholes and angles involved in the 1940 act that they did an entire new one that expanded and updated it.
http://www.jag.navy.mil/legal_services/ ... 20SCRA.pdf
In December 2003, President Bush signed the Servicemembers Civil Relief Act (SCRA), Public Law 108-189, which updated and replaced the former Soldier’s and Sailor’s Civil Relief Act (SSCRA). The Servicemembers Civil Relief Act can be found at 50 United States Code Appendix Sections 501-593. The full text of the Act is available on the link to the right.
The stated purpose of the SCRA is to, "provide for, strengthen, and expedite the national defense through protection extended by this Act to servicemembers of the United States to enable such persons to devote their entire energy to the defense needs of the Nation; and to provide for temporary suspension of judicial and administrative proceedings and transactions that may adversely affect the civil rights of servicemembers during their military service."
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Re: Mortgage settlements
The way I read this, the wife was the biggest jerk of them all. Even with the clamp-down on information releases, she wasn't living under a rock big enough to not know, 1) there was a war heating up, 2) troops like her hubby were being deployed, and 3) the Chaplain wasn't camped out on her doorstep therefore he wasn't dead.JamesVincent wrote:His wife received the letters, figured he stopped paying his bills (since he didn't call) and left him and took his kids and never answered them. So he comes home to no house and no family.
She was in a position to know, she had the chance to inform the uninformed parties, she could have stopped everything. Instead it appears that she merely used this as an excuse to do as she pleased - run away from an unhappy marriage, get a divorce, collect child support.
When Desert Shield got started my hubby was in the first wave to be deployed. He received two days' notice then I didn't see him again for seven months. Sure enough, I got a notice from the IRS that we were to report for an audit. I wrote back, cited the SSCRA, and told them that if they could convice his commander to redeploy him we'd be happy to show up at the appointed time. The audit was cancelled.
(FYI, if you're interested, hubby and I were both on active duty. He was deployed, but I was temporarily medically disqualified so I had to stay behind and do the jobs of everyone in my section who deployed with his group. There were a lot of long work days on both sides of the ocean.)
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- A Councilor of the Kabosh
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Re: Mortgage settlements
I can guarantee he would not have disagreed with you. He did not have very many kind words to say about his ex when I knew him. Another troop i served with ran into the problem of car insurance penalties while stationed in the Middle East. He left his car parked at his mother's house with the tags on it. At some point the insurance company cancelled the policy on it (I believe he forgot to set up an auto payment or may have just decided not to pay... out of country for a year and whatnot.) and sent the MVA in Md a notice of cancellation. In Md. it is highly frowned upon to not have car insurance so they started charging him fines. IIRC it is $150 for the first 7 days and then either $50 or $100 a day afterwards. Whatever the fine is he ended up with over $7,000 in MVA fines by the time he returned. It took him a few months but he was able to get it straight.Kestrel wrote: The way I read this, the wife was the biggest jerk of them all. Even with the clamp-down on information releases, she wasn't living under a rock big enough to not know, 1) there was a war heating up, 2) troops like her hubby were being deployed, and 3) the Chaplain wasn't camped out on her doorstep therefore he wasn't dead.
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