Financial Decisions on Short Sales

Julie,
It is for both, but your income may be a factor. Check with an accountant about your income.

Hi Julie,
The debt forgiveness act applies to the short sale and forclosure. Do a quick search on google and you can find all of the requirements to qualify, not that there are many.

Since we are in Texas, the house belongs to both you and your husband, even if the deed only shows your name (community propety law). However, the loan is most likely in both of your names. If not, just be aware that this is only affecting YOUR credit.

Hi! I work in the short sale business within my company. One thing to keep in mind is that the amount left over after the short sale- you will still be taxed on that. It will show as EARNED INCOME on next years taxes. A short sale is obviously better for you (and most of the time the bank) but just be aware of the amount left over, you will have to pay taxes on. If you have other questions,please feel free to message me!

We also did a short sale on our home and our understanding from our mortgage company was that it does include the short sales as well..Our mortgage company was going to give us a 1099, but they did not.
Dave Ramsey's web site is a great one to look at, and you can call a financial counselor there as well.
We found our realtor on Dave Ramsey's web site, and she negotiated with our mortgage company, we did not have to deal with the mortgage company ourselves. In fact when they called we told them, per the loss mitigation department, that only our realtor was supposed to deal with the mortgage company, not us. We were polite, but firm and they left us alone.
We actually ended up living in our house three or four months without paying anything. A great blessing at the time. We did have our house for sale and people looking at it often.

J.

Hi Julie,
I am sorry about your situation. We had to do a short sale in 2007. We received a statement from the bank called Forgiveness of Debt. It counts as income when you file your taxes. However since Bush inacted that law, you don't have to pay taxes on it. My husband called the IRS, and they confirmed it. You do have to file an extra form.
Also we only sold the house for about $14,000 less than we owed on it, but when we received the statement they said they forgave us $40,000. I can only assume that was lawyer fees, and other costs.
I will be praying for you,
T.

I am a realtor, but I am not an expert in short sales.

We have had our share of problems the last several years and have had to talk with our mortgage company on several occasions to work out payment arrangements. Mortgage companies today seem to understand that lots of folks are having problems and are very willing to do work-out plans regardless.

If you haven't already, talk with your mortgage company's loan resolution department. Since you are going through a divorce, I also presume that you are working with an attorney. Talk with the attorney about your options.

Short sales involve lots of negotiation with your lender regardless and although they may not be as bad on your credit record as a foreclosure, they are a big negative.

My husband ended up on disability which affected our income and life unexpectedly. Our mortgage company has since restructured our loan to a fixed rate and with terms that we can no live with.