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The mortgage relief act is hailed as a savior by many homeowners who would have otherwise incurred even greater losses in the housing crash. The exact start of the crash is tricky to pinpoint though the results are far easier to see. Starting in 2007 a wave of foreclosures and mortgage lender bankruptcies hit the country with unprecedented catastrophic results. With a call to action by the people, the Bush administration scrambled to form some kind of recovery plan and the Relief Act was part of it. It is now commonly accepted that the main cause of the housing bubble collapse was greed. With home prices reaching an all time high in the late 90's and interest rates at a low, banks, mortgage lenders, and other institutions were eager to put people in homes on borrowed money. Sometimes it worked out and those people were able to get a nice fixed rate 30 year mortgage but others had to rely on a subprime loan in order to get their slice of the American Dream. A subprime loan such as a subprime mortgage is given to those individuals that can not qualify for more traditional types of mortgages. Usually the person in question will have a poor credit score, one below 620, blemishes on their credit history such as delinquent payments or even judgments against them, and a low debt to income ratio. All in all, the person is believed to be a risk but can still get a subprime mortgage. Predatory lenders during the time of the housing crash are among those who get the primary blame since they knowingly sold subprime mortgages that may have started at a fixed rate but converted to adjustable in a matter of years which caused havoc in the households affected causing them to go into foreclosure. The Mortgage Relief Act was enacted to help those household who showed a measure of responsibility when it came to the paying of their loan but there were some other qualifications. If the person had to sell their home in order to pay off the mortgage they do not have to pay the income tax on the amount of the loan that was forgiven. Not everyone can get this benefit, however. If you took out the mortgage for home improvements, if the loan was taken out just for this purpose, and if the person is shown to have made an attempt at repayment, then they qualify. California was one of the hardest hit states by the housing bust. While the Relief Act only lasted for a year or two at best, California decided it to be best to extend the relief act until 2012. Supporters feel that this is the only way to insure that those persons who need this help with get it. The Mortgage Relief Act came as a saving grace to households who lost their homes in this crisis especially for those in California.

Searching for a comprehensive yet easy-to-understand overview of the Mortgage Relief Act? Get it now on http://www.nphsrealestate.org


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An Overview of the Mortgage Relief Act