Wednesday, April 22, 2009
WHAT IS A SHORT SALE
A short sale occurs when a property is sold and the lender agrees to accept a discounted payoff, meaning the lenders will release the lien that is secured to the property upon receipt of less money than is actually owed. A short sale means the sellers’ lender is accepting a discounted payoff to release an existing mortgage. For owners who can no longer afford to keep mortgage payments current, there are alternatives to bankruptcy or foreclosure proceedings. Not all lenders will accept short sales or discounted payoffs, especially if it would make more financial sense to foreclose; moreover, not all sellers nor all properties qualify for short sales. As a real estate agent, I am not licensed as a lawyer or a CPA and cannot advise on those consequences. Except for certain conditions pursuant to the Mortgage Forgiveness Debt Relief Act of 2007, be aware the I.R.S. could consider debt forgiveness as income, and there is no guarantee that a lender who accepts a short sale will not legally pursue a borrower for the difference between the amount owed and the amount paid. A lawyer can determine whether your loan qualifies for a deficiency judgment or claim. Although all lenders have varying requirements and may demand that the borrower submits a wide array of documentation.
# posted by royhomes : 7:58 PM
