Secondly, which is very telling when one makes such statements..there is NO deficiency judgment when you successfully execute a short sale. The Mortgage Debt Forgiveness Relief Act refers to the issuance of a 1099 by the bank as the IRS looks at the amount forgiven as ordinary income.
The Mortgage Debt Forgiveness Relief Act eliminates this for foreclosures on primary residences ONLY.
A deficiency judgment is what the bank can seek if the property is taken back and resold and the amount of the proceeds is less than what the Final Judgment was.
It is very important that you understand that there is no Deficiency judgment when a short sale is accepted.
Like I said, I normally don't do rebuttal answers but in this instance the information you received was so wrong it could have caused you problems.
C'mon people..at least be honest and transparent when speaking to the consumer.
One other fact remains unmentioned. In a short sale, the debt is forgiven. The Mortgage Debt Forgiveness Relief Act then provides that the forgiven debt not be taxed as income. The benefit in this, unlike many foreclosures, is that the lender does not seek a deficiency judgment against the debtor.
The lender is shorted and accepts less than the mortgage balance- lender loses- buyer gets the property for somewhere about 30-45% less than the mortgage balances.
The seller does not make any money in a short sale however there are many reasons why now is the right time to do a short sale if you find yourself in this situation. If you would like more information on this feel free to contact and we're happy to answer your questions.
The seller does however do a lot to save his credit by completing the short sale instead of allowing the home to be forclosed on.
"Short Sales" exist when the property is worth less that the owner owes on the property.....Thus it is no longer able to be sold at a price that reflects the true market value. The bank then considers selling the property "short" of the money that is actually owed to them.
The seller will make nothing on the deal and his/her credit will be negatively affected.
The "Eckler Team"
The Seller can not take any proceeds away from the closing of a short sale. the bank is taking a hit in order to settle the debt, and the Seller is allowed to have the property sold via short sale so that the Seller does not incur a foreclosure on their credit report.
If you are in foreclosure and are considering a short sale. Please make sure that if you elect to work with a Realtor, make sure they know what they are doing and have actually completed short sales. There are way too many "experts" out there. Be very careful.
The seller isn't making a penny.
If a lawyer is brought into the mix, well of course someone is going to pay him.
I may not be understanding your question completely, but you can find more information about short sales on my website.
Take a look at this article I wrote about Short Sales that should explain the process.