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I think many agents use this phrasing to identify an REO... where the bank already has foreclosed on the property. these can take from 10 days to a month to close in most cases. Often agents use the term corporate owned meaning again it is an REO. Short sales don't ahve to be slow and agents with the skill sets to properly approach one can get them done faster. I recently closed one in 2 months so they all aren't horrible, there is hope.
The bank has the option to write it off or go after the seller for the difference. If they write it off, a collection company can purchase it and still go after the seller. It doesn't matter as far as your credit is concerned, it still is BAD.
Can someone else verify this statement?
My understanding is that the Bank can do one of two things with the shortfall:
- Pursue a deficiency judgement/collect
- Write it off and consider it a loss.
My understanding is that if they truly write it all off, then you will receive a 1099 and will need to report that "income" to the IRS.... but they can no longer go after you for a deficiency, nor can they sell the debt... That would be double dipping.
Now if they try to pursue the deficiency and decide to sell the debt to a collection agency, that is not the same thing as "writing it off"
I'm not a realtorbut I have noticed these listings too. I believe that they let epople know that homes are not short sales because a short sale can be lengthy, timewise for the bank to do all of it's mumbo-jumbo before the sale can go through. "Not a short sale" probably means a quicker process and less hassle.
My understanding is that the Bank can do one of two things with the shortfall:
- Pursue a deficiency judgement/collect
- Write it off and consider it a loss.
My understanding is that if they truly write it all off, then you will receive a 1099 and will need to report that "income" to the IRS.... but they can no longer go after you for a deficiency, nor can they sell the debt... That would be double dipping.
Now if they try to pursue the deficiency and decide to sell the debt to a collection agency, that is not the same thing as "writing it off"
Am I on the right track here?
Thanks!
you and I have the same understanding. EXCEPT, that there is a tax forgiveness on the short / definciency amount currently.
It's a way to let the consumer (or agents) know the house is a great deal without the hassles of a short sale. Actually very good marketing strategy to, as one poster said, essentially scream the house is priced to sell. Motivated sellers with capital to do so are in a position to take a loss just to sell the house, so a buyer can get the 'low price' without jumping through the hoops of a SS.
My understanding is that the Bank can do one of two things with the shortfall:
- Pursue a deficiency judgement/collect
- Write it off and consider it a loss.
My understanding is that if they truly write it all off, then you will receive a 1099 and will need to report that "income" to the IRS.... but they can no longer go after you for a deficiency, nor can they sell the debt... That would be double dipping.
Now if they try to pursue the deficiency and decide to sell the debt to a collection agency, that is not the same thing as "writing it off"
Am I on the right track here?
Thanks!
The current legislation says that "QUALIFYING DEBT" is being forgiven on a PRIMARY RESIDENCE, with no tax consequences. You will not have to pay taxes on the "income"
The trick is what is qualifying debt. It must be one of two things.
Either
1) Money you took out during the original purchase of the home (1st or 2nd)
or
2) Money you took out during a refinance that was spent specifically for upgrades to the property.
If you took money out during a refi to pay for kids college, or a new boat, or whatever, you DO have to pay taxes on that difference in a short sale situation.
Other than that, everything else you said is correct.
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not a short sale
