What is a Deficiency Judgment versus the 1099?

What is a Deficiency Judgment versus the 1099?

When we do a short sale for our customers, our main priority is to leave you, the homeowner, better off than when you first contacted us to stop your foreclosure. This means that we will be requesting that the mortgage company waive any deficiency judgment against you, the homeowner.

It is important to understand that the deficiency judgment can be pursued by the bank to recover any difference or shortage that the bank incurs from the short sale, (the difference between what you owe and what we finally get the property sold for.) The Mortgage company could also mail you a 1099 saying the amount made as a result of the short sale is income on their tax return.

It is our intention to always be clear and upfront with our clients and want you to know before we start the short sale process of what could happen. Being upfront about the short sale process to you is imperative to us. We don’t want to mislead you in any way about the ramifications of the short sale process.

We will request the mortgage company waive the deficiency judgment against you and provide that t agreement to you in writing for you to keep for your records.

If, for any reason your lender will not agree to waive the deficiency judgment against you, we will notify you and leave the decision to continue the short sale proceedings or not with you.

As far as the 1099 being issued, the Federal Government in 2007 made it possible to avoid these charges any certified CPA can advice you on how to get that waived on you tax returns.

We appreciate the opportunity to help you and we do not want to “sell you” on the idea of doing a short sale, we are simply pointing out that if you are behind in payments and owe more that what your home is worth, this may be the only solution.