SHORT SALE, DEED IN LIEU, FORECLOSURE/YOUR OPTIONS

Should I Stay or Should I Go?

Many homeowners want to stay in their homes at all costs, and for as long as possible. I’m happy to fulfill these client’s requests and have been able to successfully defend every client’s case that I have had the privilege of defending under these circumstances. Other clients are tired of the fight, tired of the home and ready to move on with their lives with a fresh start, a new home or apartment and no more of the fight and anxiety caused by living under a foreclosure. For these clients a properly negotiated short sale is the perfect solution to their problem.

A Properly Negotiated Short Sale or Deed in Lieu

In a properly negotiated short sale, the bank or lender agrees to accept whatever contract price is placed in front of them, without regard to the amount owed, and agrees to forgive the balance of the debt owed to the homeowner. These negotiations are tricky and getting the details correct is absolutely essential to make sure the homeowner is protected from future liability, but when done correctly, the homeowner can walk away totally free from any liability except some negative reporting on their credit.

1099-C Tax Liability

The homeowner may still face a 1099-C tax liability on the difference between the mortgage and what the bank received as proceeds from the sale. There are a few important legal steps that can be taken to help minimize or reduce this liability and each situation must be reviewed on a case-by-case basis.

Deficiency Judgment

As reported in an article in the St. Petersburg Times, borrowers may still face liability from the bank for amounts the bank did not collect. This too can be worked out with the lender to reduce or eliminate the homeowner’s liability when the transaction is negotiated by an experienced real estate attorney.

 

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