Most Maryland home owners won't be affected by the new tax bill signed by President Bush yesterday, but anyone who purchased or refinanced their home in the past 2-3 years could be, if the loan balance is higher than today's selling price. That situation is known as a "short sale".
Homeowners were taxed on any amount forgiven by a lender in a short sale negotiation or foreclosure, in the past, creating a tremendous financial burden. Now, under The Mortgage Relief Act (click here), the loan amount written off by your lender will no longer be considered taxable for debts forgiven between Jan. 1, 2007, and Dec. 31, 2009.
To find out how this legislation could affect you, please follow this link:
Crofton Home Sellers - Relief for Short Sales
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Margaret,
Like your post, we need to be direct with consumers and reach out to them and their needs!!! I love this last paragraph, it is so transparent...
"Selling your home in this market requires more than luck... There is no substitute for experience! In the past I have actually helped clients negotiate VA compromises, MIP bail-outs, and short sales - not just read about them or attended a "how to" class. If you are "upside-down" with your mortgage loan and want to sell your home now, contact me to find out how I can help you."
Thanks, Fran
hi Margaret,
I just informed my client who we closed on her short about 3 weeks ago that at that time she might receive the 1099 from the bank on her short overage. She wasn't that badly over due to my excellent estimate:) and the most would be $1000 but told her to consult an attorney or accountant. Also not every bank will send you one but she should have been prepared anyway. I'm glad they did this ...why would a person who already needs relief have to pay taxes on a the amount of relief? didn't make sense in the first place.
Neal - I can't imagine the fear of taxation on top of the stress from dealing with a short sale. 'Glad for your client that she'll have some relief from this new bill.
Linda - You're right. A short sale is more than another form of financing - it's a really tricky negotiation that involves the homeowner, the lender, and often the title company and an attorney. A real estate rookie would be wise to involve a manager, broker, or "old pro" in the office as a resource in this situation.
Karen Anne - I guess everyone has to get their start somewhere!
Katie - Thank you. I hesitate to hammer home "experience" on AR since there are so many newbies, and I don't want to offend them. But this is one area of real estate that it IS important, like it or not! Fortunately, when I encountered these situations in the past, I had real pros to guide me through - my first VA compromise was for the sister of an attorney who actually lectured agents all over the country in short sales, and my first MIP bailout was for a former mortgage company President who was dying of cancer, and knew just what had to be done. These two cases gave me the confidence and background to take on short sales after that.
I am now considering short sale for a house in Maryland, but have received much conflicting advice and info. I took over a property to assist a friend, but now he is now about to declare bankruptcy and leave me holding the bag for the entire debt of the property. The market bares about $100K less than what I owe. I need to know how bad this will effect my credit rating, if i need to use the same RE agent who i am currently with (has not been able to sell the house for many months), etc.
Seeking any advice, i am desperate, i do not want this house, but dont know how to get rid of it.
Neil.cohen2@verizon.net
Neil: What exactly did you do when you say you "took over" the property ? Were you on the original note as a co-borrower ? If not, were you added to the note somehow with your friend still being on the note ? My guess is that if you are "officialy" on the note along with your friend... then yes, I believe losing the house will hit you pretty hard. First try and explain to me what officially happened. Second, call the lender and see if you have legal liability on his mortgage.
Finally, if you are going to try and sell the house, get yourself a Realtor who specializes in short sales. I think Margaret Woda would be great ! Call her. Her cell number is (443) 292-2029.
Neil, I'll contact you directly via email.
Hello Margaret,
I have been reading this string and do have one question with regards to a short sale. Is it true that the lender can still file a judgment against the seller for the amount of the shortage?
Thanks
Kevin, Much as I would like to answer that, real estate agents are not allowed by law to answer legal questions. If your property is in Maryland, use the contact link on my profile page and send the question to me - I'll reply with the name and number of an attorney who will answer that question for you.
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