In 2007 President Bush signed the “Mortgage Forgiveness Debt Relief Act of 2007”. This bill is known as H.R. 3648 and it clearly states that as an owner of a primary residence you will face no tax liability for a loss taken by the lender on a short sale. Although the lender may send an IRS Form 1099 to report their loss, you do not have to claim the banks loss as income to you. It is important that in the year you perfect a short sale you seek assistance of a CPA to discuss your personal tax situation.

On a primary residence, a short sale helps you avoid a deficiency judgment as the lender is agreeing through negotiations to accept less than what is owed. A foreclosure usually ends up with the homeowner filing bankruptcy because the lender sues for a deficiency judgment and gets it. This is one reason why most people choose to short sale rather than allow foreclosure.

In most cases a short sale is noted on your credit report as a legal settlement. It is easier to remove the late payments from your credit as opposed to a foreclosure. With the assistance of American Credit Repair we have had success in helping people get their credit repaired efficiently and becoming loan able once again.


There are no upfront costs to the seller therefore the risk of foreclosure help scams is eliminated. You will have reputable consultants and licensed brokers working to help you.  By listing your property with the assistance of a licensed broker, the costs of negotiations are absorbed by the lender though real estate commissions.
 

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