The LA Times recently ran this article stating that homeowners who have received a loan mod are still vulnerable to defaulting on their loan.

Specifically, the article stated that “at the end of the first quarter of 2013, the (Treasury Department’s TARP Program) report found, nearly half the oldest of the HAMP modifications, from the third and fourth quarters of 2009, were going back into default.” The article goes on to give specific statistics of these “re-defaults”.

We’re coming up on the middle of 2013. What many homeowners are facing – and maybe don’t know – is that the benefits of the 2007 Mortgage Debt Relief act were extended only to the end of this year under the American Taxpayer Relief Act of 2012. If and unless Congress extends it (doubtful I think at this time), homeowners doing a short sale (or losing their home in foreclosure) in 2014 will be 1099’d without the benefit of the current IRS debt forgiveness.

If you’re struggling to keep up with your loan mod payments, consult your tax adviser sooner vice later to see what tax implications you may be facing next year – if worse comes to worst.