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Archive for August 27th, 2008
Colorado Springs Short Sale Primer, an explanation of debt forgiveness
Colorado Springs Short Sale Primer on Deb
When lenders accept less than what it is owed, they have 3 options:
- They can do nothing
- They can go after the deficiency
- They can send a 1099, which mean they forgive the debt and send out a 1099 form for the deficiency,
As an example:
Property is worth $220,000
Balanced owed is $240,000
Net received by the lender after the short sale is $190,000
The lender incurred a deficiency of $ $50,000
Why would a lender send a 1099 for the Deficiency?
The lender lost $80,000 of their income and they forgave the borrower’s debt. Per IRS regulations Read the rest of this entry »
