Colorado Homes for Sale-Colorado Metro Denver Area Specialists

Short Sales and Deficiency, you are not Alone

When lenders accept less than what it is owed or the full payoff, they can do one of the 3 things:
1) Nothing: Very few lenders do not do anything against you when you do a short sale.
2) Go after the deficiency: Some lenders go after the deficiency that you had, they do it through court, they usually want to put you a "deficiency judgment".

3) Send you a 1099: 3) They forgive the debt and send you a 1099 form from the deficiency,

for instance.
Your property is worth $200,000.00   
You owe $260,000.00
Lender just receives net $190,000.00
You had a deficiency of $ $70,000.00

Lenders send you a 1099 for that deficiency, why? Because for the lender was lost and even when you lost your Colorado home it means that you had an income, but guess what?

Forgiven debt is considered income by the internal revenue service IRS in the tax the lender accepted the Short Sale or forgave a portion or what was owed.

There is a new law called "The mortgage forgiveness debt relief act of 2007", Distressed Colorado home sellers and can benefit from this and can get rid this income. If you want to refinance your home and you owe more than is worth this works as well, maybe the lender will accept to refinance it and you will avoid to pay taxes from the difference (deficiency).

If you are in a distressed situation, don't think it twice, it is better to do a better arrangement than to leave your home into Foreclosure.

If you need advise in Colorado Short Sales, please call me or send me and email with your  scenario and I will analyze your hardship situation to help you, even whether you are in other state I will point you to the right track with a fellow realtor who specializes in Short Sales too.

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