# Has anyone done a "Short Sale" recently?



## SCRich (Feb 27, 2008)

I am in a real bind and do not know who to trust other than someone else tht has lived it.

We built 2 homes in Florida in 2005, between the buying and CO we got hit with 2 hurricanes and then the bubble broke, they are located in Vero Beach, South Florida one of the spots were the market has crashed worse than anywhere in the country and before most other parts of the US. One home was for a rental and one was for a immediate sale well we ended up taking a job transfer and are 10 hours away, too far to rent and keep tabs but we did it anyway even though the income now with this market is less than $1K for a brand new 3/2 with tile and marble counter tops in a community. The renters gave us the shaft with rent, trashed the little bit of carpet we had, drilled holes all over the walls and then walked out 9 months later. We will not rent anymore, at least we will not unless we know we are going to walk away from the house.

We have managed to maintain the payments with no trouble other than trouble for ourselves. HOA has increased the monthly payments more than 140% and now the bank is asking for a huge escrow payment. We were doing insurance and taxes on our own and now they are demanding to do it themselves where our monthly budget will be a lot larger and tougher to do than before.

ANYWAY we have had it we are done. We paid roughly $280K, we owe $240K and we have had one for sale for $200K for over 1 year with no offers and very few showings. We will not have the $40K to make up the difference for very long any more. Prices have crashed and the market seems to have another 3-4 years before it picks up again but 2 years ago everyone said it would be 2-3 years. 

We have a credit score of over 810 and cherish it but enough is enough, we can not hold on any longer and the longer we hold on the higher our risk of going broke. We want to short sale or walk away. We have heard there are pro's and con's to both (Deed in Lieu of Lien vs. Short Sale) but what we hear comes from real estate agents who apparently can not be trusted after getting the shaft 3 times in Florida. This is our 4th agent and he is asking for another MLS extension after over a year and no offers. We think he is doing nothing and waiting for us to go short sale for an easy sale in this market. So it's time to either short sale or find another agent, or find a lawyer to try to get the bank to do a Deed in Lieu.

Can anyone tell me what has happend to them after a Short Sale credit wise and possibly any legal ramifications? We are in our home now which we plan on living for the next 15-20 years. We have a new car and do not plan on purchasing another one for at least 10 years. We do have some savings and we own 1 other car outright plus a tractor and ATV. Will they be able to come after anything we own outright ? What will it do to our credit ? Will we have to pay the IRS capital gain's tax on the ammount we short sale which we have heard. Again we purchased for $280K, we owe $240K, we have not been able to sell, nor has any other people in the area for $200K in 1 year and $230K the year before that. I am taking a wild guess that the Short Sale will not happen unless it is priced at $185K or so. The last time we visited 2 months ago to clean the place up a bit we saw the builder offering to build out the last 5 lots at $179K so the $185K may be wishfull thinking.

Some say deed in lieu is better since we do not need to pay any real estate agent or closing costs and we will have no capital gain's, just a pure loss and the cost of a lawyer. deed in lieu we were told that hit's your credit more than a short sale but it's a myth that a short sale does not hurt your credit anyway. We have also heard that the banks will refuse to speak to anyone about a deed in lieu unless you have defaulted for 4 months or more in 1 year, we really do not want to miss any payments, we never have in our life. We do not know what the truth is and we do not know who the expert really is. Tax Advisors don't know, lawyers are too busy and mostly know about bankrupsy issues and all the credit counselors that I have heard of only want to speak to people who have bad credit which we do not ....yet!

HELP!!


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## jingle5616 (Mar 18, 2004)

Credit agencies haven't caught up to the Short sale as of yet. I think that they will very soon, as short sales a frequent and becoming more so. 
I am a real estate investor. It takes a little more time to buy a short sale than a foreclosed bank sale. The bank, in my experience, is much more likely to accept a short sale than not. I have been told it is much cheaper for them. One of my partners is a Realtor who is specializing in short sales and actually has people buying down (a lower valued home) while they place their over valued real estate for sale via the short sale process. In one case, the family short sold there home and moved down the block to an almost identical floor plan for $125K less (a home that had gone through foreclosure). They are not even being penalized credit wise.....some say smart, me I say questionable ethics. You make the call. 

Jingle


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## SCRich (Feb 27, 2008)

I have heard the same things but I have also heard several other concerning things and this wraps up most of what I have heard on one page.

http://homebuying.about.com/od/4closureshortsales/qt/060907SScredit.htm

We all know that real estate agents can not be trusted any longer, and a short sale is something they will try to pressure someone on since they will still make a comission and that is very important in this day and age when sales are few and far between.

We have not defaulted at all on any payments and still have excellent credit but with 2 years left of savings it would be better to jump the boat now since we know IF AT BEST AND AN ACT OF GOD if it were to sell. If we were able to sell within that two years we would be left with nothing, and the longer we wait so that we can sell and make the difference up with cash (almost nill now) the closer we will be not to be able to accept a low offer since every month our savings get smaller and smaller. Since we are listing at $40K less than what we owe every month that goes by we really need to be increasing the price since we have less to make up the difference each and every month.

I have also heard over and over again that the banks will not speak to people who are in a bind but not in default, it's like you have to go into default before they are willing to listen instead of trying to work something out before the situation get's ugly, it makes NO SENSE! I am willing to do a lot, like give up one home and all of our savings so that we can maintain the 2nd home payments or even take a 40 year loan to strech our savings out longer so that we can wait till' the market picks up which may be 6 years for all we know. It's not like I have not tried over the past 2 years.

If we do a short sale at the end of the rope then I hear we will have capital gains, and that may be on a $60K loss or more and with no savings then we have nothing to pay the taxes off! These are not primary residences.

We know that we will need to fix our credit, that will be down the toilet but you live and learn, it's not like "The Donald" did not make mistakes although we are not like him we are not getting back into it per-se. We bought a large piece of land, maybe in 20-30 years we will plow the house over and subdivide or something like that who knows. 

Our concern is and that is why we would like to hear from others that have done short sales if they will come after any assets you have ie: Current Home, cars/motorcycles/ATV's etc that are free and clear, any savings that are remaining, any accounts that may also have your name on it (I have my name on my Mom's accounts since I manage her bills etc.) try to place a lien on any property you own free and clear since we own the land but have a small morgage on our residence etc.

Losing the money we invested and losing most if not all of our money market which is what remains of the profit from our original residence I can accept. At least we can move on and start saving again, at $4K a month in morgage PLUS HOA, Lawn, Water, Power etc. it is much more and with that going away in the bank every month if we have bad credit for 5-8 years I can live with that. BUT if they can take everything away that we have/own AND keep the homes then I got to figure what type of lawyer I need and start "protecting" whatever assets I have over a long period of time while paying my bills regularly. Problem is that most lawyers are too busy with forclosures, bankrupt families or have got out of real estate law due to the market, they too want to hear from you AFTER you are in trouble. We need to speak to people who have expirience in our type of situation and not many people are responsible enough to try to get help BEFORE the problem get's out of hand so a lot of experts just don't know. 

It sounds dirty but I know of a lot of people out there that have done much worse and the lenders are no angels either, the recent news reports prove that clearly. I have even heard of couples transfering ownership to one partner then getting a divorce and then walking away with the other partner keeping the credit and just buying another home! MAN!! I look at what I am doing as protecting my children's future, but just to do that so a couple can buy a cheaper larger newer house and ditch the old one..that's too much like a scam.


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## Frugalite (Jun 8, 2008)

I wrote a long post yesterday and decided against posting it. 

It is my understanding that a Federal Law is now requiring ANY amount forgiven on ANY debt HAS to be reported to the IRS by the one who holds the debt and it will count it as income. So you end up paying taxes on the forgiven debt as though it is earned income, say 28% or so. I have heard home owners in California are facing this and Florida is hard hit too, as you know. If you are shorting for $50K, then take 28% and that is your tax burden for doing a short sale.

So, if you are going to allow a short sale on your home you need to be prepared to pay taxes on the difference. OR, give the lender a promissory note for the difference, meaning you pay the shorted amount out to them or they get a judgment. 

This kind of thing has a way of following you through life, sadly. Just letting you know. It can effect your job opportunities, too. 

I talk to a lot of people in your shoes and it has gotten worse with gas prices going up so much. 

My suggestion is to hire a CPM certified property manager, NO ONE ELSE WILL DO, and pay the negative cash flow. With this plan you pay as though you have that promissory note with the lender or payout plan with the IRS but you do so without having your credit ruined, without being tackled by the IRS and risk judgments from them on other property you own or have your name on, etc.

Any investor you deal with is going to want you to short sale the house and they will make money on it when they sell it, you can be sure. Realtors only know what they are told, sadly, so they think short sales are the answer to it all. Don't let a Realtor be your property manager, hire a CPM whose daily job it is to manage residential real estate, not commercial unless they have a separate division. You want them working on your home, not a commercial deal for a lot more money. A firm that manages is better than a Realtor in a company who manages, unless that is ALL they do. Do you see what I'm getting at here?

I'd save myself the hit on credit, keep the IRS out of my bank account and pay the negative, cause you are gonna pay one way or the other. You may have to rearrange your dreams to get this mistake behind you. No one else is going to say, hey The Donald made mistakes, cause they are only looking at what you did, or didn't do to get yourself into this situation.

You have no idea, or maybe your do, how they can wrack up fees and pile on fees. And yes, a judgment or an IRS lien that goes unpaid will result most likely in the securing of your assets to pay for the losses. They can't take everything and can only take what laws allow under bankruptcy, but they can make you wish you had never signed those papers.

Adjust your life, etc, do the hard thing now and it will get easier down the road. 

Im not a lawyer, accountant or anything so you check out what I said, ya hear? Bottom line, take responsibility until you can sell it, owner finance it or otherwise dispose of the property properly. 

That is what I would do given the knowledge that I have working with investors and such.

A Deed in Lieu will be part of public record, will show up on credit report and is seen the same as default.

Yes, you are in the middle ground where good credit keeps you from being able to talk to people who can help you....sadly. Been there too.

My only other suggestion is to contact your EAP through your insurance at work and get a free session with financial and legal. Although I think the best answer is to get a CPM and hunker.

To your best,
Melissa


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## snowonder (May 25, 2008)

My daughter is trying to do one in AZ but found out that the bank does not approve short sales. If she sells the house cheaper than what she bought it for she is responsible for the balance. She also told me that a short sale will ruin her credit for seven years.


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## cindy-e (Feb 14, 2008)

We tried to. Lender was less than honest. Long story. Won't go into it now. We lost our shirts. Be VERY careful. Send EVERY piece of paper to EVERY party involved TWICE on a FAX machine that records that things WERE recieved, and on what date, and at what time... or better yet, send everything through the mail and make every party sign to receive it. NEVER accept anybody's word for anything, and frequent ads that sell houses in your area to make sure your lender isn't trying to sell your house under your nose for a better deal. People are going to say "They can't do that. That is not legal." But they can. And they do. And they get away with it.

Cindyc.


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## SCRich (Feb 27, 2008)

Some banks accept them and some do not true, ours does and we thought of it but again the only person winning in a short sale is the real estate agent who get's a comission no matter what. A short sale can take months and often by the time the bank says yes the buyer has walked away.

Short sale by what I have been told by many in the credit field will give you no credit for 2 years then 2-5 you will have a high interest rate and at 5 years it will become realistic, 7 years is for a full out walk out forclosure.

EAP- My company has no legal EAP and finantial is only in reference to our 401K investments, nothing else. Tried that about 1 year ago.

CPM's in South Florida they are few to find and the ones that I have are crooks. I tried one once then gave up on them and moved over to a friend of mine just to collect and that was a mistake also, hence not very much of an option to rent. The market is FLOODED with homes I LITERALLY mean 10's of thousands of homes just in the south florida area and the bulk of them meaning over 10K surplus vacant homes just in the Treasure Coast region where we are. Rent for a new home normally valued at $250-300K is $1,000 IF YOU ARE VERY LUCKY. CPM's will take first month rent and last month rent as their initial pay along with a credit application fee and another processing fee then they will charge you from 10-15% of monthly rent. I have several friends in the area that are in the same boat as I but still live there, they had to get rid of the CPM's since they took the money but took no responsibility. If someone did not pay they still charged you the percentage for the month, if they walked out they still kept all the payments from the set up PLUS another fee for clean and prep for the next renter where they would charge you everything over again, and if renters did not pay they did very little to collect except advise you to negotiate then evict. If you had to kick them out then there were other fees for the process in addition to the county court fees for evictions. CPM's either will take your money or have left the business, there are too many vacant homes and not enough renters. Rent is so low now that those who live locally will handle it themselves to maximize the profits so the good CPMs are nowhere to be found, they have moved or found another line of work. Take home at $900 plus cost of $2200 a month does not equal up x2 homes nor does it even come close to be able to maintain them even at a monthly loss.

Another for instance is the last renters did not pay water for 4 months out of the 8 months they were there before just walking out one night. When we returned to clean the place up (out of pocket cost of $500 plus time) we tried to have the water turned back on and we had to pay their bills AND the base charge on the water for the several months no one was in the house before they turned the water back on! EVEN FOR THE MONTHS THAT THE WATER WAS SHUT OFF AND NO ONE LIVED THERE!!! This is the county water authority..they are crooks like everyone else in the state and just an example why we and thousands of others have left Florida. Another example of how you just can't keep up even if you do everything right. Security?? It does not work, we have always had renters not pay the last month rent or two or 3 then leave. So that security is worthless towards the water and clean up costs. Ask for 2 months security plus a dog depost and a clean up fee and they just go somewhere else to rent, we have tried. 

The news has spoken about Florida but they have not really done a in depth study so a lot of people in the rest of the nation really do not know EXACTLY how bad it really is. They know forclosures are high but that is about it, they don't know how it has affected ten's of thousands directly and affected each and every resident indirectly. Old freinds are out of jobs now, can't even get a restaurant job since many are closing and another one can't even get regular pay as a CNA. Health care of all things in the silver state!! Home Depot/Lowes letting people go and contractors with 20 years on the job out of work for over 6 months. That all trickles back to the rent and forclosure problem continuing the viscious cycle.

We did adjust our life and that is what allowed us to maintain our good credit up to now for several years. We purchased a home together with my Mother and we take turns with the bills, we have not been on a vacation in over 4 years, we cash in the maximum allowed of vacation time every year that we can, we only eat out on rare occasions like a birthday or when my mother wants to eat out and is paying, we do not drink, and we stay home all the time. All shopping is done while at work or on the way to or from work to minimize fuel use. The only thing we spend money on is food for the family and kids stuff. I have finally talked the wife into using GoodWill for that now also since she had an aversion to that. I am growing vegtables and that will help for a few months but not all year, HECK growing your own can actually be expensive also by what I know now. Maybe not as expensive as store bought but expensive nevertheless. This fall I will be hunting in our back yard for hopefully all of our red meat for the year and we try to shop for some food things in bulk at manufacturer discount outlets when we can. It's just a bit of a drive to make it cost effective and there is just so much Stouffers, Lean Cuisine and Banquet we can eat in restaurant (5-10lb) packages :icecream:

Enough though..I am digressing and venting, I am sorry. Just frustrated after speaking to one neighbor from down there over the phone last night. He owned one home across the street from me and forclosed several months ago, the home next to me he just finished doing a deed in lieu. He also tried renting but the income/expense was just too great to keep up with and after renters walked out he took the opportunity and gave it up. Monday he had to send out a check to cover $1800 in HOA fees and what really got him was PMI. The PMI company refused to allow the bank to accept the deed in lieu unless he paid the PMI company back at $200 a month 0% interest. Personally I think that is a rip off since why bother paying PMI if they will not cover you for defaulting! BUT in some way it's good I guess $200 a month for the rest of your life or $68k Capital Gain's next year. If they make you pay off the balance every month then it's not a gain, it's just a really long loss and I do not think the IRS can tax you on that.

I have made an appointment with a lawyer/CPA on Monday, we will see. I guess I got lucky, really lucky if he were have been a lawyer/cpa/broker/credit counselor but I could dream...


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## SCRich (Feb 27, 2008)

cindy-e said:


> We tried to. Lender was less than honest. Long story. Won't go into it now. We lost our shirts. Be VERY careful. Send EVERY piece of paper to EVERY party involved TWICE on a FAX machine that records that things WERE recieved, and on what date, and at what time... or better yet, send everything through the mail and make every party sign to receive it. NEVER accept anybody's word for anything, and frequent ads that sell houses in your area to make sure your lender isn't trying to sell your house under your nose for a better deal. People are going to say "They can't do that. That is not legal." But they can. And they do. And they get away with it.
> 
> Cindyc.


I am sorry Cindy to hear that, but I guess I am lucky in one way, the bank can't sell it. NOTHING is selling now in the area other than $1M+ beach homes which would have sold for 2x or more a few years ago. 

If they sold it I guess I would in some be happy. Take it, I was willing to give them the house and $40K when I had it just to make it go away. I no longer have $40K since most of it went to pay them, taxes and insurance over the past few years so if they just took the house and sold it good riddens! Heck I would even be willing to sell my right arm if there were a market for old used body parts. And NO I am not joking! It would be well worth it if I erased those homes from my life and started over with just what I have now and 1 less arm.


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## cindy-e (Feb 14, 2008)

SCRich said:


> I am sorry Cindy to hear that, but I guess I am lucky in one way, the bank can't sell it. NOTHING is selling now in the area other than $1M+ beach homes which would have sold for 2x or more a few years ago.
> 
> If they sold it I guess I would in some be happy. Take it, I was willing to give them the house and $40K when I had it just to make it go away. I no longer have $40K since most of it went to pay them, taxes and insurance over the past few years so if they just took the house and sold it good riddens! Heck I would even be willing to sell my right arm if there were a market for old used body parts. And NO I am not joking! It would be well worth it if I erased those homes from my life and started over with just what I have now and 1 less arm.


OK... hold the phone here SCRich... That was a VERY difficult time in our lives. In truth, we thought we wouldn't survive it. But we did. And so will you. Step back and take a bit of perspective here... In the end, as long as you hold close to your family, (and your old used arm , you'll make it. They haven't taken it yet exactly because they CAN'T sell it. That give you time to ride this out. But what if they did? The "worst" happened to us. ...and we all lived to tell about it. We are still here... stronger, maybe, and hopefully wiser too. I would not wish what you are going through right now on my worst enemy (if I had an enemy), but this is not the end of your story. Hang on. 
From one who has been where you are and lived to tell about it,
Cindyc.


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## adamtheha (Mar 14, 2007)

Wow, this is insane!!! Most Canadians have NO idea that this sort of thing is going on in the States, our housing market is starting to hit the skids a bit, but there isn't the forclosure problem (for now). I'll be praying for you guys down there, and we also sold our house here for a bit of profit (not nearly as much as I'd hoped), but it should be enough to secure some land, which we'll build on ourselves.
We're renting for now, buying food, and the only person who even cares is me, everyone else wants to buy boats, new trucks, motorcycles and toys. 
By the way, growing food should NOT be expensive, all I use is a shovel, hoe, rake, garden gloves and a cheap compost bin. My rhubarb is paying off like a slot machine, and every day we have more and more strawberries. Keep it simple.


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## Frugalite (Jun 8, 2008)

SCRich,

Yes, I do know how bad it is in Florida. This is when investors make their money; when blood runs in the streeets. I work with investors. Lots of people getting wealthy in this Florida market. Mostly, they buy and hold, put a renter in place via a CPM and sit back for a few years and decide how they want to take their money. And they take advantage of short sales. What no statistic shows is the toll on the families this takes.

Good for you growing your own veggies, we started our teeny garden this weekend and hope to learn and be more self reliant. 

I hope you have peace both in this situation and the one you are now in. That is key to moving forward. Which seems to be a slippery slope these days, try as we might!


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## SCRich (Feb 27, 2008)

Yep..that is what we had planned to do but the bottom just crashed way too much to make it possible. Even with a renter for the values to go up enough will take way too long if ever to recoup the costs and make a profit.

I made an appointment with an attorney/cpa for this afternoon to see what the best recourse is. The only 2 options I see is the bank re-negotiating for a VERY reduced rate and me placing some renters in there for 5-6 years then getting out for what we owe and not much more, or just walking away. Depending on the 1099 problems just walking away may be our best option but we will see what he has to say.


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## Janine (Apr 14, 2008)

Just want to let you know that Realtors get squeezed out on short sales, too. The banks will only offer a FRACTION of the commission. And they do it at the last minute; so what are you going to do after all the legwork??? Not only that, short sales, REO's & foreclosures are a pain in the neck to deal with.

Real estate is a whole new world out there.


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## Intrigue (Jun 11, 2008)

I almost hate to say this but I think that the speculators deserve what they get.....nothing!

Speculative investing on people's homes, flipping houses, and driving the price of home ownership up and up beyond the reach of families in need of homes is disgusting. I realize these investors are buying and selling HOUSES but, really they are all potential HOMES. Terrible the way people try to make a dirty buck from someone's desire to own a home for their family. The speculator wants to pocket quick cash at the expense of the homeowner paying for years and years on an inflated mortgage.

And when things go wrong, and eventually the market always crashes, they cry the blues and lament that they have lost money. Well, too bad! No sympathy from me.

Let them all declare bankruptcy.....good riddance!


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## AngieM2 (May 10, 2002)

Intrigue said:


> I almost hate to say this but I think that the speculators deserve what they get.....nothing!
> 
> Speculative investing on people's homes, flipping houses, and driving the price of home ownership up and up beyond the reach of families in need of homes is disgusting. I realize these investors are buying and selling HOUSES but, really they are all potential HOMES. Terrible the way people try to make a dirty buck from someone's desire to own a home for their family. The speculator wants to pocket quick cash at the expense of the homeowner paying for years and years on an inflated mortgage.
> 
> ...


I almost deleted this as it's not even approaching 'nice'. But, I've left it because while some may feel as this person does, and it does hurt not to be able to afford housing at what seems really inflated prices - the investors are taking the risk of building a house that a person can purchase or not.

And Intrigue - I'm on the not being able to get, side of the equation just so you don't think I'm a rich fat cat speculator not appreciating your views.
It does hurt not to be able to afford a house that seems to be about a $60K and it's priced $250K or more depending on where you are located.

Also, if they declare bankruptcy - many others might have to as their invoices will not be paid, so they cannot pay their bills and employees, etc. There is a very big domino effect to a bankruptcy depending on the size of the entity going down that path and how many creditors will be effected.

Angie


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## Shawhee (Jun 19, 2008)

Hang on a minute. I just left the mortage industry to be a SAHM. I have been in real estate/mortgage for the last 8 years. I will tell you this, look up the rules on the short sale - I will try to find this, but the federal gov. earlier this year passed something (dont remember name) that if a short sale is done from a certain date through a certain date 07-08 time frames, that it will be forgiven, and it will NOT be included as income via IRS. Please be patient and I will go try to look this up. My sister just did a short sale in AZ - the first on her house was accepted, the 2cnd mortage that she had on it (duh why did she need this) will not be forgiven. 

Shawna

Edited to add the information below:
IR-2008-17, Feb. 12, 2008


WASHINGTON â Homeowners whose mortgage debt was partly or entirely forgiven during 2007 may be able to claim special tax relief by filling out newly-revised Form 982 and attaching it to their 2007 federal income tax return, according to the Internal Revenue Service.

Normally, debt forgiveness results in taxable income. But under the Mortgage Forgiveness Debt Relief Act of 2007, enacted Dec. 20, taxpayers may exclude debt forgiven on their principal residence if the balance of their loan was less than $2 million. The limit is $1 million for a married person filing a separate return. Details are on Form 982 and its instructions, available now on this Web site.

âThe new law contains important provisions for struggling homeowners,â said Acting IRS Commissioner Linda Stiff. âWe urge people with mortgage problems to take full advantage of the valuable tax relief available.â

The late-December enactment means that reporting procedures for this law change were not incorporated into tax-preparation software or IRS forms. For that reason, people using tax software should check with their provider for updates that include the revised Form 982. Similarly, the IRS is now updating its systems and expects to begin accepting electronically-filed returns that include Form 982 by March 3. The paper Form 982 is now being accepted, but the IRS reminds affected taxpayers to consider filing electronically, which greatly reduces errors and speeds refunds.

The new law applies to debt forgiven in 2007, 2008 or 2009. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, may qualify for this relief. In most cases, eligible homeowners only need to fill out a few lines on Form 982 (specifically, lines 1e, 2 and 10b).

The debt must have been used to buy, build or substantially improve the taxpayer's principal residence and must have been secured by that residence. Debt used to refinance qualifying debt is also eligible for the exclusion, but only up to the amount of the old mortgage principal, just before the refinancing. 

Debt forgiven on second homes, rental property, business property, credit cards or car loans does not qualify for the new tax-relief provision. In some cases, however, other kinds of tax relief, based on insolvency, for example, may be available. See Form 982 for details.

Borrowers whose debt is reduced or eliminated receive a year-end statement (Form 1099-C) from their lender. For debt cancelled in 2007, the lender was required to provide this form to the borrower by Jan. 31, 2008. By law, this form must show the amount of debt forgiven and the fair market value of any property given up through foreclosure.

The IRS urges borrowers to check the Form 1099-C carefully. Notify the lender immediately if any of the information shown is incorrect. Borrowers should pay particular attention to the amount of debt forgiven (Box 2) and the value listed for their home ( Box 7).


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## SCRich (Feb 27, 2008)

Shawhee, exactly primary residence. As far as speculators..I am not ashamed because we were not doing it to be the typical dirt bag that drives around in their mega buck Jag or Caddy (leased usually) with rope chains and a Rolex watch but we did it as a last ditch effort. 

Even though we owed money we were able to get a bit of money scraped up and a home equity loan. We were trying to get OUT of debt not IN debt and it would have worked if it were not the insurance and tax crisis after getting hit with several hurricanes, it was just bad timing then the market crashed. We were going to quickly sell them at a small profit, much smaller than everyone else in the area hence the quick part just to get all of our bills paid.

When the taxes and insurance skyrocketed in the area and I was offered to transfer or lose my job we transfered. If it were not for me having to move it would not have been a big deal, we would have moved into them since they are really nice homes. We were living in a 25 year old piece of junk and wanted to pay off our bills, sell that old house and start living smart. Well it backfired.. no not a greedy thief like the people who bought my Mother's home for $100K less than what it is worth or the the other one who purchased our primary home for $70K less than it was worth, just a person who was looking for a way to turn the little savings and equity they had into enough to pay off all of our debt and into a home large enough for our family.

Anyway..just got back from the lawyer and he said no way to go bankrupt since we do not meet the criteria and have little assets to make it worthwhile for the bank, maybe go hire a Florida Real Estate lawyer that has been doing this for the past few years. His only suggestion was to stop paying since that is the only way the banks will try to work with me, he said it's sad but it's the only way.


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## Intrigue (Jun 11, 2008)

I wrote the post about how poorly I think of real-estate speculators because I wanted to stress a point. The point is that if anyone is going to think that leaveraged investments are a good thing, then they better think a second time. If this saves one or two members from losing serious money, than a good thing has been accomplished.

What is leverage investing, you ask. Simply you borrow money to make an investment. If all goes well, the investment earns more money than the cost of borrowing. This is what the big-boys do all the time. Problem is an investor really, really needs to know what they are doing AND they must have enough reserve capital available in case they get into trouble. Doesn't matter if the investment is commodities, stocks or real-estate. If the big-boys that know a few things get in to trouble but the real secret is to know when to cut your losses and have a real exit strategy.

Way too many people have gotten suckered into buying one of those books like How To Buy Real Estate With No Money And Make A Million Bucks. Or they've attended the seminars and got suckered in.

In fact, I do a fair amount of investing (but not real-estate). It's very interesting that the big-boys have all liquidated their investments into other things like gold, natural resource commodities (one of the main reasons why oil prices are so high) and non-U.S. currencies. The rough times are only starting. If anybody in the U.S. thinks that times are tough now, just watch what happens over the next 6 months and perhaps as long as the next 6 years. Inflation is at an all-time high. The government reports a 4% inflation rate but that is artificially 'adjusted'. The real inflation rate is 2 or 3 times that amount. The U.S. gov has amassed the largest deficit in history. That money needs to be paid back. The only way the gov can payback the debt is either 1) raise taxes a huge amount or 2) let the U.S. dollar slide to junk status and then print even more money. Strategy #2 is exactly what the great Bush administration is doing right now folks because it's an election year and strategy #1 is not a great option if one hopes to get elected. In the meantime, people are losing jobs, losing homes, losing their life savings and it's only the beginning. I don't make this stuff up. I read a LOT of investment newsletters and just passing on the info.

Forgive me if I don't have a lot of sympathy for real-estate investors. Not when good, honest-working people are struggling to buy their first home for their families, or keep the home they have. It's really funny how people who don't know what they are doing in their leaveraged investing cry that banks are crooks, real-estate sales people are crooks, everyones a crook. In actual fact, if ya get into trouble, you need expert advice (expensive expert advice) and it's gonna cost $$$ to get out of trouble. 

Time to batten down the hatches. Cut personal debt, decrease spending.


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## MaryB (Jul 6, 2008)

SCRich-
I dont know if you have heard about him, but I want to encourage you to give Dave Ramsey a call. He is a national talk show host on finances, and talks alot about short sales when situations like this come up. I think he could really give you some excellent advice. He has a website, you can go there, find what times he is on, and call him. He will give you the skinny on all your questions. Good luck!
Mary


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## luvrulz (Feb 3, 2005)

SCRich - I have a friend in Real Estate in Bokeelia FL whose house has been on the market forever and I will give you his phone # or email if you pm me. He will be extrmemely helpful and will be able to suggest something, I'm sure. I don't know *why* I know this - but give it a try! He is a Christian and will tell you like it is.....


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