A1: The payment of the incentive to the investor PRA to the bearer is considered by the government as the payment of the loan by the government on behalf of the owner of the house. HAMP encouraged private lenders and investors to finance their credit adjustments. Mortgage service providers received a down payment of $1,000 for each change they made. These lenders were also entitled to obtain up to $1000 per year for each borrower in the program for up to three years. A3: To the extent that the reduction in the amount of PRA leniency is greater than the incentive payments made by PRA investors, the reduction is made as a result of debt relief. The total amount of this debt repayment is reported to the IRS and the homeowner on Form 1099-C, the cancellation of the debt, so that the owner can exclude one or any of these gross income. See questions 4 and 5 below for some exceptions that might apply. The pre-crisis housing bubble was financed by mortgage-backed securities (MBS) and security-backed debt securities (CDOs), which initially offered higher interest rates (i.e. better yields) than government bonds, as well as attractive risk ratings from rating agencies. The crisis was caused by the increase in subprime credit and the increase in real estate speculation.
The share of lower-quality subprimes that emerged in a given year increased from a historical range of 8% or less to about 20% between 2004 and 2006, while in some parts of the United States, the shares of high-interest mortgages were much higher A high percentage of these subprimes , for example, more than 90% in 2006, were variable rate mortgages.  Housing speculation has also increased, with the share of mortgage settlements in investors (i.e. those with non-primary housing) increasing from almost 20% in 2000 to about 35% in 2006-2007. These changes were part of a broader trend toward lending standards and riskier mortgage products , which helped to make U.S. households more indebted. The ratio of household debt to personal disposable income increased from 77% in 1990 to 127% at the end of 2007.  When the real estate crisis began, the mortgage industry was ill-equipped to respond properly. Mortgage service providers did not have sufficient resources to meet the needs of a market affected by the increase in foreclosures. In addition, their know-how and service infrastructure were limited to monitoring collections and silos of those who did not pay. They did not have the systems, personnel, operational capabilities or incentives to come into large-scale contact with homeowners and offer a reasonable exemption from prohibitive mortgages. A2: No.
This payment by the government on behalf of the owner is excluded from the owner`s income as part of the general social exclusion.