Southwest Florida Title Insurance & Real Estate Blog -

Tax Consequences

This is the 8th tip of “10 Questions You Should Ask About Florida Short Sales” eBook, which is available as a FREE download.

If a Florida short sale lender cancels debt, there may indeed be tax consequences. The Internal Revenue Service treats cancelled debt as income. The 1099-C Form from the IRS gives a nutshell version of what cancelled debt means to a debtor and taxpayer in its “Instructions for Debtor”:

“If a Federal Government agency, certain agencies connected with the Federal Government, financial institution, credit union, or an organization having a significant trade or business of lending money (such as a finance or credit card company) cancels or forgives a debt you owe of more than $600 or more, this form [i.e., the 1099-C] must be provided to you. Generally, if you are an individual, you must include all canceled amounts, even if less than $600, on the “Other income” line of Form 1040 . . . .”

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Money

This is the 7th tip of “10 Questions You Should Ask About Florida Short Sales” eBook, which is available as a FREE download.

FL Short sale lenders sometimes require cash contributions from short sellers in exchange for the lender’s agreement to approve the sale. The amount of cash demanded varies considerably and, as with Promissory Note requirements, depends very much on the FL short seller’s ability to make that sort of contribution and the amount of the loss the lender is absorbing.10 Questions You Should Ask About Florida Short Sales

We have seen as little as $250 and as much as $75,000. These amounts are ordinarily negotiable to the extent that the lender will negotiate.

Much like with Promissory Note requests, demands for cash contributions are more common when mortgage insurance is involved. If your loan has mortgage insurance, you should prepare to deal with this type of request.

If you would like to learn more about FL short sales and don’t feel like waiting for the next post, simply click the eBook icon on the right and download your FREE copy today!

If you have additional questions, please feel free to contact us online or call us at 239-985-4142.

-Chris

Promissory note

This is the 6th tip of “10 Questions You Should Ask About Florida Short Sales” eBook, which is available as a FREE download.

Lenders occasionally require a new obligation in exchange for approving a Florida short sale. This new obligation is typically in the form of a promissory note.

Most promissory notes required after short sales are unsecured debt obligations – not unlike the note you signed for your original home loan but without the mortgage to secure the debt.

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Credit Card Picture

This is the 5th tip of “10 Questions You Should Ask About Florida Short Sales” eBook, which is available as a FREE download.

If you are considering a short sale, the effect of such an occurrence may not be the most pressing issue. It could be that unemployment, curtailment of income and other market forces have already wreaked havoc on your credit score.

Nonetheless, or if you are considering a short sale for more strategic reasons, it is important to understand that a short sale will affect your credit worthiness.

Credit scoring is very complex.

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This is the 4th tip of “10 Questions You Should Ask About Florida Short Sales” eBook, which is available as a FREE download.

It is not uncommon for homeowners and real estate professionals to consider a short sale impossible if there is more than one mortgage involved or junior liens (i.e., liens or judgments that affect the title to the property). This is not surprising for a number of reasons but is nonetheless a misconception.

As you may imagine, there are plenty of homeowners who have more than one mortgage on their properties. Perhaps they took out an equity line to pay for a child’s college or bought a property with 80/20 financing.

There are plenty of these situations and you may be in one and wonder rightfully whether or not you can successfully short sell your property on a second mortgage short sale.

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You’ve been there, I’ve been there – WE’VE ALL BEEN THERE!

That point in time when you look at all the facts in a transaction and come to question if it will ever close!!!

Do throw in the towel? Call for help?

If you are like most of us, you probable have invested a lot of time and energy into the transaction, so giving up and throwing in the towel is not an option!

That is when we enter the picture and I come to experience the “The Hardest Short Sale Ever” 😉

In the spring of 2010, a Cape Coral REALTOR® who had heard me speak on short sales at the Cape Coral REALTOR ® Association called me to ask if we could help on a potential short sale. This was a seasoned professional; but I could tell from his tone that he seriously doubted that the deal in question would ever be able to close. Because of the size of the deal ($1M+) though, it made sense to at least give it a shot.

Here is a list of items that, at first blush, supported the realtor’s doubts about the possible success of this Cape Coral short sale:

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Congratulations! Your short sale offer was approved!

We want you to know that as a short sale realtor, you’re in good hands with Winged Foot Title. We believe in exceptional service without exception.

As you know, there are three main ingredients to a successful short sale.  They are

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This was a great question I was asked earlier this week, during a short sale process presentation I did to a group of REALTOR’s from Sellstate Priority Realty, a very successful brokerage in Cape Coral, Florida.  It was a very engaged group, and I was glad when someone asked a question about what to do about a junior lien in a primary home short sale scenario.

Here is a short video clip (about 4 minutes) that addresses this common issue:

So as you heard, Liz and Lynda presented the following scenario of a primary home short sale of a Cape Coral property. The owner of the property is disabled and can no longer afford the home.  Here are the details:

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If you are a buyer’s agent and you’re searching for a Short Sale Specialist in Fort Myers and the outlying areas of Southwest Florida, we invite you to view the video above which explains our operation.

Winged Foot Title is comprised of 3 full time employees who are dedicated to the orchestration and the timely closing of your short sale. We do not get paid unless the transaction closes so we obviously have a vested interest in the completion of the short sale.

Here are a few additional talking points that I cover in the video:

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Winged Foot Title Travels to Great Lengths to close Short Sales (photo courtesy of Carl Wycoff)

What lengths would you go to in order to save your bank mortgage short sale from foreclosure?

Our team at Winged Foot Title refuses to take “NO” for an answer!

After being told that a Saxon Mortgage short sale was a lost cause, Winged Foot Title persevered and got Freddie Mac to approve the short sale and save it from the brink of foreclosure.

This is just one of the examples of the lengths to which our team will go to get the job done.

How many times have you heard of a bank mortgage short sale story like this?

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NOT LEGAL ADVICE: This information is not to be construed as legal advice. Legal advice must be tailored to the specific circumstances of each case. Every effort has been made to assure that this information is up-to-date as of the date of publication. It is not intended to be a full and exhaustive explanation of the law in any area. This information is not intended as legal advice and may not be used as legal advice. It should not be used to replace the advice of your own legal counsel.

Winged Foot Tite, LLC is not associated with the government, and our [short sale orchestration] 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.