Tags:
Scott,
Every short sale that I have been involved with issued a 1099.
Here is what my non legal opinion is:
1. Nope, never seen a bank not issue a 1099
2. If they do, they can not pursue a deficiency on a primary mortgage, again this is my opinion.
3. Correct
4. Correct
I completely agree Jeff. This should not have come up at the closing table. I am sure this is a huge lesson that she will not forget. I just had to pose the question because she said the attorney told her that she would need to go back to the bank and seek a waiver for the 1099. I told her that there was no way the bank would waive a 1099 nor could they legally if they are truly forgiving the balance. She questioned my bold statement since the attorney indicated it would be possible so I had to pose the question to see if perhaps I was being short sided and others are getting a 1099 waived with full forgiveness. It appears based on all the responses I have gotten that I spoke correctly:)
I have seen quite a few issues pop up on this forum lately that should not have been issues in the first place. Short sales are not fun, they are not without pain, they are a lesser of two evils with foreclosure being the other, more painful evil. I could have understood a couple of years ago agents being caught in short sale issues where they were inequipped to handle, but this has been going on long enough that there is no excuse for issues like tax and deficiency issues not to be addressed early in the process. I have no love loss for the banks trust me, but I think short sales falling apart due to mishandling by agents is the biggest drag on short sales as a whole.
Up front, broadly explain the issue of deficiency or not, how first and second liens typically respond, how that could have tax implications, and how that differs, if at all, from forclosure. Make accountant and attorney recommendations for legal advice for their particular situation. Once you do this, you will have an educated client that understands why short sale is better then foreclosure, and will be a willing and motivated party to the transaction, even though it may be painful.
I have seen quite a few issues pop up on this forum lately that should not have been issues in the first place. Short sales are not fun, they are not without pain, they are a lesser of two evils with foreclosure being the other, more painful evil. I could have understood a couple of years ago agents being caught in short sale issues where they were inequipped to handle, but this has been going on long enough that there is no excuse for issues like tax and deficiency issues not to be addressed early in the process. I have no love loss for the banks trust me, but I think short sales falling apart due to mishandling by agents is the biggest drag on short sales as a whole.
Up front, broadly explain the issue of deficiency or not, how first and second liens typically respond, how that could have tax implications, and how that differs, if at all, from forclosure. Make accountant and attorney recommendations for legal advice for their particular situation. Once you do this, you will have an educated client that understands why short sale is better then foreclosure, and will be a willing and motivated party to the transaction, even though it may be painful.
I completely agree Jeff. This should not have come up at the closing table. I am sure this is a huge lesson that she will not forget. I just had to pose the question because she said the attorney told her that she would need to go back to the bank and seek a waiver for the 1099. I told her that there was no way the bank would waive a 1099 nor could they legally if they are truly forgiving the balance. She questioned my bold statement since the attorney indicated it would be possible so I had to pose the question to see if perhaps I was being short sided and others are getting a 1099 waived with full forgiveness. It appears based on all the responses I have gotten that I spoke correctly:)
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