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Can I Short Sale My Big Bear Cabin?

A short sale occurs when someone sells a house or condo for less than the outstanding mortgage debt against the property. Lenders will want to see a true hardship and proof of the borrowers inability to repay the debt. In Big Bear many homes will not qualify for a short sale since they are second homes.

For a primary residence homeowner struggling with mortgage payments, a short sale is a way to get rid of a property. It may be possible for a homeowner to buy another home after two years, depending on the circumstances. Usually after foreclosure, one must wait three to five years before they will qualify for a loan.

With a short sale, the seller could remain liable to the bank for the difference between the sale price and loan amount – this is known as a deficiency judgment. Purchase loans on primary residences are exempt. Homeowners who have refinanced or gotten a second mortgage may wish to consult an attorney on their liability. Sometimes deficiencies can be negotiated down, or even eliminated.

Tax liability gets complicated and you may want to talk to an accountant. Remember that capital gains are based upon the sale price, not the debt on a property. Also, if the sale price does not cover the mortgage and the lender simply “forgives” the difference, that amount can be taxed as income. However, debt forgiveness up to $2 million is exempt through 2012 on loans used to buy, build or improve one’s primary residence. Read more on www.irs.gov by searching the site for Mortgage Debt Relief Act of 2007.

Don’t assume that you will qualify for a short sale just because you are upside down on your loan. A short sale needs to be approved by the lender, and the debt that is forgiven may be taxable!

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December 27, 2009 - Posted by | Big Bear Real Estate

4 Comments »

  1. […] https://bigbearhomes.wordpress.com/2009/12/27/can-i-short-sale-my-big-bear-cabin/Market Specialist, Inventory Expert, Big Bear Real Estate Agent Coldwell Banker Associate, The Tim Wood Group Coldwell Banker Mountain Gallery 42153 Big Bear Blvd. P.O. BOX 6820 Big Bear Lake, CA 92315 DRE#01703081 … […]

    Pingback by They worked my ex with a flower » Blog Archive » What others have been saying about coldwell real estate | December 27, 2009 | Reply

  2. […] https://bigbearhomes.wordpress.com/2009/12/27/can-i-short-sale-my-big-bear-cabin/Market Specialist, Inventory Expert, Big Bear Real Estate Agent Coldwell Banker Associate, The Tim Wood Group Coldwell Banker Mountain Gallery 42153 Big Bear Blvd. P.O. BOX 6820 Big Bear Lake, CA 92315 DRE#01703081 … […]

    Pingback by What others have been saying about coldwell real estate | I Wanna Play | December 27, 2009 | Reply

  3. How flexible are lenders on this topic?

    Comment by South France Immobilier | January 13, 2010 | Reply

    • Lenders are working with sellers that qualify for a short sale, but if your home is a second home you may not qualify. Do you have a home here in Big Bear that you need to sell?

      Comment by Steve | January 13, 2010 | Reply


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