PHOENIX - The Mortgage Debt Relief Act expires at the end of the year and there appears to be a big push in the real estate industry to get homeowners considering a short sale to move quickly.
The Act offers relief to homeowners who would owe taxes on the mortgage debt after a short sale or foreclosure.
Real estate and tax experts warn that some agents may used this expiration as a gimmick to get more listings and even may offer some bad advice along the way.
"It appears to be a lot of hype," said Greg Markov, an agent with HomeSmart. "People who are upside down and who are going through severe hardship should consider a short sale. But any agent who is out there overstepping their boundaries offering legal and tax advice shouldn't be trusted at first glance."
He offers free advice on his website about the short sale procedures.
Markov said there is always the possibility too that that deadline will be extended as it has been before. While he thinks it is good for people to look into it, he is concerned if people are rushing into those decisions.
Phoenix real estate attorney Robert Nagle agrees.
He pointed out that when you sign a contract with a broker they force you to waive claims against them leaving no recourse later if they later feel they have been duped.
He said it is not that people shouldn't short sale and not that there are not a lot of people who will benefit from what the Mortgage Debt Relief Act does.
He said he is seeing too much "blanket advice" being given out and and the Act being used as a scare tactic or marketing tool to get people to hurry up and list.
He said the vast majority of Arizonans will not see any benefit from the Act since most of the Valley's home loans are "non-recourse" loans and will not be taxed anyway when sold.
Anyone looking to into these kinds of decisions should consult a tax professional
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