Go to Jeff Salisbury LWGate Home Page.From: BOB FORD <BOB_FORD@compuserve.com>
Subject: a bad real estate deal
Date: Fri, 8 Jan 1999 11:02:16 -0500
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>From: Nancy Slator <neslator@amherst.edu> >Subject: A bad real estate deal = >We bought a condo (half a duplex) for $104K in 1993. The >assessed value immediately dropped to $78K. At the moment >we owe $92K and it's assessed at $82K. We have no plans to >move, but what would happen if we did? If we had to move >for job reasons, for instance, and we sold for $82K, I imagine >we'd owe the bank $10K in cash? Which we don't have. If we >deeded the place to the bank, would that hurt our credit rating? >- -- Nancy Slator, neslator@amherst.edu = Nancy There is no easy answer for your problem. If you owe your mortgage lender $92,000, they will want $92,000 to settle the debt just like your or I would want the full amount of any debt we were owed. They might consent to a "short sale" (taking less than the amount owed) if you could give them a good reason why the should. About the only good reason is that it will cost them more money to dispose of the house if you give it back to them than letting you pay less than you owe on the mortgage. = However, please consider the tax consequences of a short sale. = You may get a 1099 from the lender for the difference of the amount owed and the amount they take to satisfy your debt. In your case it would be for $10,000. This must be added to your reported income and you must pay income taxes on this amount. If you give your house back to the lender, your credit rating would suffer. The way they look at it is that you owed $92,000 and you did not pay the amount owed. They will report that to the credit reporting agency. GOOD LUCK BOB FORD BOB_FORD@COMPUSERVE.COM - -
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