Home Selling in 92392>Question Details

Cye, Home Seller in 92392

I have an "upside down" mortgage. If I short-sale, what happens with the difference between "short-sale amount and amount actually

Asked by Cye, 92392 Sat Aug 20, 2011


Help the community by answering this question:


Hi Cye,

If this is your primary residence, you will be 'forgiven' the difference (refer to CA law SB 458 - you can Google it). Make sure if you decide to pursue a short sale to interview a few Realtors before deciding which one you want to hire so you hire someone you are very comfortable with as Short Sales can be very time consuming and patience is required.

Good luck.

Shanna Rogers
SR Realty
1 vote Thank Flag Link Sun Aug 21, 2011
For answers about short sales and foreclosures go to http://www.chooseahomenow.com and click on the box that says: Is your home worth less than you owe?
1 vote Thank Flag Link Sun Aug 21, 2011
I was just looking through old post and I noticed yours. If you were not able to refinance at the time of the post, I can certainly help you out now. You can call me at 408-352-5147 or email me at AGreer@themortgageoutlet.com. You can check us out at http://www.TheMortgageOutlet.com. I will look at your situation and present you with some options.

Alex Greer
NMLS #1056079
0 votes Thank Flag Link Thu Aug 15, 2013

Under the new CA Law signed by Gov. Brown in July 2011, Lender(s) who agree to a Short Sale may not further bind the Seller to owe or pursue the seller for the resulting deficiency - provided the Short Sale is on a principle residence AND the financing is still non-recourse (a refinance has not taken place). For more details please refer to:

CA Senate Bill 458 Now Prohibits 1st/2nd Deficiency Judgments*

Be sure to review the text concerning the Federal Mortgage Debt Relief Act of 2007 which allows taxpayers to exclude income from the discharge of debt on their PRINCIPAL residence. The discharge of debt is typically treated as INCOME by the IRS! 12/31/2012 is the deadline to fall under this protection.

Best, Steve
0 votes Thank Flag Link Mon Aug 22, 2011
Hey Cye,
Yes SB 458 was recently passed to address the issue. Here is a link discussing the topic:

But you should contact a real estate attorney to discuss your specific situation and any tax implications.

0 votes Thank Flag Link Mon Aug 22, 2011
Shanna has it right. See SB 458. There have been major changes in the last year to protect home owners. BUT...there could some tax liability if you have pulled money out. Call your tax professional.
0 votes Thank Flag Link Mon Aug 22, 2011
We will negotiate with your lender to try to get you off the hook for the deficiency. Feel free to give me a call, and I can explain the process to you.

Eli Givoni, Director
Short Sale Department, LLC
Serving all 50 states

MARS Disclosure for General Commercial Communications
Short Sale Department, LLC is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan. If you stop paying your mortgage, you could lose your home and damage your credit.
0 votes Thank Flag Link Sun Aug 21, 2011
CActually since you are in CA, the law is different. There is law passed this year in CA that protects you against a deficiency judgement in a short sale.

Speak to a local realtor in your area for advice. Good luck.

Millie Lumpkin,SFR
0 votes Thank Flag Link Sun Aug 21, 2011
You should look your home up on http://www.makinghomeaffordable.com to see if you qualify for a HAFA short sale. There are many variables that go into the answer to your question. Is there only one mortgage on the property? who is (are) the lender(s)? Is yours a recourse or non-recourse state? There is also an excellent book called "Underwater Home" by Brent T White that may offer some in depth answers. The other thing I highly recommend is to consult with a real estate attorney who is familiar with the short sale and foreclosure laws in your area.
0 votes Thank Flag Link Sun Aug 21, 2011
If your lender approves a short sale on your home and accepts less, they may forgive the balance due or issue a deficiency judgment against you for the balance. In addition if they forgive the balance, the IRS may tax you on what the bank forgives. We are not tax experts or attorneys and can't give advise on these issues. Contact an attorney and tax expert in your area before entering into a short sale for guidance.

All the best,
Gary Geer

0 votes Thank Flag Link Sun Aug 21, 2011
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