Mortgage Short Sale

This is when the holder of a mortgage note agrees the accept less than the full amount due to retire the note.

Most mortgage lenders, usually correctly, don't trust borrowers who ask for a "short sale." The reason is a prospective buyer might be trying to get a bargain purchase price at the expense of the mortgage lender.

typically for a short sale to be approved the owner must be several months behind on their mortgage payments

During a short sale transaction, it is important that preliminary title is constantly updated so that any liens or judgments that remain outstanding are caught and dealt with in a timely manner.

If you are contemplating a shortsale have a tax advisor and an attorney handy. Often these transactions get quite tricky when it comes time to deal with the IRS. The IRS will often try to tax you on the amount you were short, considering it income.

In most all cases, forgiven debt is considered income in the eyes of the Internal Revenue Service. Most lenders will give the borrowers a 1099 or simi;ar earnings statement for the amount of the debt that was forgiven.

Nowadays lenders won't always require you to be behind in payments. If you obviously qualify for a short sale by providing them the financials, then the longer it takes the more money they will lose.

» DISCLAIMER: The information contained in this article on 'Mortgage Short Sale' is a collection of contributions by licensed mortgage professionals and is not the opinion of Broker Outpost LLC. Always consult a licensed professional before applying for a mortgage.