Erick Trivedi Real Estate Law Blog on Lawyers.com

Florida Short sale, foreclosure defense and loan modification

Tuesday, February 24, 2009 by Erick Trivedi

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A short sale is a transaction where the lender who owns the mortgage on a property agrees to mark down the principal of the loan.  The lender does this in exchange for the homeowner selling the property and taking nothing from the closing table.  The ultimate benefit to the lender is that a high risk loan is removed from its books and hopefully it will be able to reinvest those funds into a more secure investment.

Shortsales are often necessary where a homeowner is upside down on the value of the property.  What many homeowners do not understand is whether there will be liability after the shortsale. 

Most often the lender will no longer be able to come after the homeowner, but there may be liability to the Internal Revenue Service (IRS) if the balance of the loan is written off by the lender.  If this happens, the IRS will consider the balance of the loan which was not repaid as income to the homeowner.

There are some exceptions to this rule, but most frequently a thorough analysis is required before concluding one way or the other.

www.trivediandassociates.com

 
Posted at 08:15 AM
Topic: Real Estate
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