Replies to This Discussion

Permalink Reply by David A. Roebuck on February 9, 2011 at 3:12am

Maggie, I would wait at least 2 years, my clients also received a 1099C and I have suggested they wait 2 full years. However, I also recommended they consult an attorney and professional tax advisor.  It will be interesting to read additional posts on this to see what others have to say!!

Permalink Reply by Alan Remigio on February 9, 2011 at 5:17am

Actually, Maggie, they can purchase right away! Shocked! Here's the caveat...they cannot use a bank or GSE sponsored program for 2 years, minimally. They can certainly buy with cash, private money, privately negotiated terms, have property gifted to them, whatever, just not able to go to the bank for a LOAN for a period of time. You must still work on raising your credit.

Look for a qualified real estate attorney experienced in  "lease option" or "subject to" types of purchase agreements. Title can transfer, or not. Talk to the attorney. Attorneys and accountants have advised on strategic defaults using the above techniques with their much wealthier clients. I'm not an attorney, but have participated in getting a homeowner into properties very soon after a short sale. Good Luck!

Permalink Reply by Thomas McCombs on February 10, 2011 at 3:21am

I have been told by a creditable CPA/Attorney that the receipt of a 1099C means that the bank has forgiven the debt. The bank can not both forgive the debt and then come after the seller later for a deficiency.

Check with your financial professional as this is something you do not want to guess about.

As far as when can they purchase again, there is no legal time constraint.  If you can find a seller or a lender who will work with you, go for it.  The time period is determined by the lender, not the law.

Permalink Reply by Jeff Payne on February 10, 2011 at 5:16am

This is a bit of a loaded question... They can buy as soon as they are financially able to buy.   Many lenders may not finance them right away.  I sold a short sale last year and the owners closed on their new home the next week.  Their hardship was a job transfer and their credit did not get hit too bad because they were current on their mortgage when we did the short sale.  Too many variables involved to answer the question

Permalink Reply by Maggie D on February 10, 2011 at 11:48am

Thanks guys, very helpful.

Permalink Reply by Wendy Brandel on February 11, 2011 at 12:33pm

Hello.  My clients are in the process of purchasing a home and subsequently decided to list their existing home for sale.  They received an offer and will be signing a prom note to pay off the deficit (balance) on the that they are selling.  Unfortunately the underwriter on the loan for their new home purchase learned of the sale and is not happy. At this point they're looking at canceling the loan app which means my client will have to back out of their new home purchase and cancel the offer on their existing home. The question that I have is...since they are paying on a prom note for the deficit on the home that they're selling is it still considered a short sale?.. It's as if they are being penalized for attempting to handle the transaction the right way.  Any thoughts or angles on how this could be handled or salvaged?  Do you know of any financer that could possible assist in this situation (state of Arizona)?