Short Sale Credit Issues.
If a bank takes a 10k hit on a loan versus a 30k hit, will it affect credit any differently?
We have a property listed, 87k owed, will probably sell for about 80k. If that will affect credit just as equally as them taking 60k, I may try to SS this for personal reasons.
Thanks.
It will increase the size of the 1099 they get from the bank to pay taxes on that phantom income that the bank forgave. Additionally, I believe the deficiency judgment is also able to be collected by the bank, if they choose to do.
Best, Dave
The deficiency judgement is not an issue. While I always make my SS offers contingent on no deficiency judgement, it is understood that if the bank accepts the SS offer, that there will be no judgement. The 1099 is correct, however, a good CPA should be able to get around the tax implications of it. It should not affect their credit any more than it already is. But doing A SS or buyout is better than going to foreclosure.