Can a mortgage company take your tax returns?

I had to move from one state to another. I have been trying to sell my old house for about a year. Finally I am going to have to do a short sell (I have a couple offers to pay less than what I owe on the home). I should probably get some money back on my tax returns and would like to use it to pay off the large credit card balances I have acquired over this period of time. Can the mortgage company seize any returns I may get because I am having to do a short sell?

No, I do short sales for a living. They cannot take their tax refunds.

Also, because of the holidays I have not read up on it completely, but President Bush just signed a law taking away the tax burden on the balance owed after the sale. Make sure you do your sale in such a way as to comply with this law.

No. If the lender agrees to a short payoff, and does not, for some reason, agree to waive the remainder of the note balance (say such as the loan NOT being a non-recourse loan), then they would have to proceed with a civil lawsuit to get a judgment in court for the shortfall, and only after they obtained such a court judgment could they execute the judgment and seize other assets, such as a tax refund.

The mortgage company cant exactly seize your return. If you default on your mortgage and they get a judgement against you they can look to seize your assets. If you place your refund in a bank acount, its fair game for them to attach. They way around this would be to cash the refund check and pay the credit cards with money orders.

No they can't seize your tax return. Call the lender and see if you can negotiate with them to settle for a lower payoff. At best let them know the situation and maybe they'll agree to work out low rate, payment plan for the balance.

Tax refunds cannot be offset for private debts. Federal and state taxes owed, back child support, and defaulted student loans are the only things tax refunds can be offset for.

No, but the government can for back taxes owed on the property.

I don't think he's necessarily going to qualify for the Bush relief plan.

Foreclosure after 1/1/2007 (yes)
Amount owed less than $1M (probably yes)
Amount owed was the original mortgage (probably yes)
Primary residence...maybe yes, maybe no.

The reference for primary residence is section 121--which is the live in it for 2 years of last 5 years ending on date of sale.

They can't take your refund directly thru the IRS, but if they get a judgement against you for the balance, they could grab the money out of your checking account once it hits there.