Short Sales | Mortgage Foreclosure Advice
Tax Ramifications for Short Sales:
Presently through December 31, 2009, if you owned and occupied your home as your primary residence for 2 years or more, they you may be exempt from recognizing as income the difference between what the bank accepts to clear your mortgage/deed of trust and what is actually owed. If you have not, you might be liable for reporting such "forgiveness of debt" as income. You should consult with an Attorney or Tax Advisor for specific advice for your situation.
Liability Ramifications for Short Sales:
If your home is sold in a short sale, the lender may require a "Reaffirmation" of debt. Thereafter, the lender, or someone they sell or assign their rights to, may demand from you what the lender lost. Signing any reaffirmation agreement may not be in your best interest and you should seek an Attorney for legal counsel specific to your situation.
Credit Ramifications for Short Sales:
It is almost certain that any foreclosure or short sale will damage your credit rating or credit scores and impair your ability to obtain future credit, mortgages or loans. Credit scores are also used in other industries and can influence insurance premiums, security clearances, apartment rentals, job screening, etc. Paying in a timely manner will have the most positive affect on future credit.
It has been documented that a foreclosure will impact your FICO credit score as high as 250-300 points, whereas a shortsale's impact is 75-125 points against the seller. You are advised to seek professional advice to determine the credit benefits of a short sale versus a foreclosure.
Profit Potential for Short Sales:
A lender requires in a short sale, in almost all situations, that the seller not receive any money from the sale. If anyone is promising you money in a "side deal," not disclosed to the lender, this may be fraudulent. Please see professional advice.
Always Seek Professional Advice for Short Sales:
You are advised of your opportunity to consult with an Attorney, financial advisor, CPA or Tax Advisor, or other professionals regarding the short sale process.
The Trey Affolter Team | Short Sale Specialists
For more information on the Mortgage Short Sale process and how to get advice on selling & help avoid foreclosure, contact us.
SHORT SALE PROPERTY SALE DISCLOSURE
The information provided above is general in nature and is prepared to alert the Short Sale Seller to potential issues, but is not specific advice to the Seller's specific situation. You should consult an Attorney for specific advice as to your situation.
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