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Amrita Jayakumar
The Washington Post|washingtonpost.com

WASHINGTON — Struggling homeowners could be hit with an unexpected tax bill in the new year.

A law that spared people who owe more than their homes are worth from being saddled with extra taxes when their banks provide mortgage relief is expiring next week. Congress hasn’t extended it. Underwater homeowners often try to negotiate with their bank so that they can sell their homes for less than they owe in a short sale or have their mortgage balance reduced.

But the difference between what the homeowner owes and the lower sales price approved by the bank is considered income for the homeowner and subject to tax by the Internal Revenue Service. read more »

 

WASHINGTON — Homebuyers considering a government-insured mortgage should make extra room in their budgets.

In an effort to reduce a potential budget shortfall, the Federal Housing Administration (FHA) will require homeowners to pay a monthly insurance premium for a longer period. This follows a decision this year to raise the premiums for all borrowers, the fifth such increase since 2009.

Although the increase should bolster the agency’s bottom line, it will make things more expensive for borrowers who depend on FHA-insured mortgages.

The insurance premium that buyers pay in addition to their monthly mortgage payment usually expires once 22 percent of the principal loan is paid. Now, all new borrowers will have to pay the premium for at least 11 years and up to the entire duration of their mortgage, according to the rule that went into effect Monday. read more »

 
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