America displaced...3 mil foreclosures but short sales are displacing even more

[xiamiam]

While it is touted as a way to save ones credit..another illusion..short sales in many areas of the country represent more than 50% of homes currently on the market..in some areas 75 to 90%..

whatever the percentage, those sales set the prices..and they are not being reported as more displaced middle class find themselves without their homes...

NO ONE IS TALKING ABOUT DISPLACED AMERICANS from short sales...hard earned downpayment and remodeling money down the tubes..out in the streets...the only figures are from the foreclosures..and while the banks are reporting the foreclosures..short sales are not included in the data ..and they are most certainly not reported as toxic assets

there is something highly suspicious here..more shenanigans...the banks get more $ in a short sale yet the homeowner loses as much as if they were foreclosed upon....excepting the illusory credit score

[xiamiam]

1. one other thing:,latest data for short sales is to mid 2009..no other reporting available..

why?..short sales are far outnumbering foreclosures currently

Data from the Office of the Comptroller of Currency shows that only 40,000 short sales were completed in the first half of 2009, the latest period available.

[lonestarnot]

2. They troll fucking neighborhoods watching for the next victim like vultures circling.

[Cass]

3. Those who go through with a short sale could end up owing the IRS, too.

Whatever the difference between the amount you sold the house for and the amount of the mortgage is treated as income and taxed accordingly if I understand correctly. So instead of being oligated to the mortgage company, now you're obligated to the IRS with a potentially large income tax bill depending on how big your loss was. The whole deck is stacked against struggling homeowners.

[Silent3]

4. Huh?

I thought the term "short sale" was being used here to mean selling a house for less money than is owed on the mortgage.

If that's what's meant, where is income being seen? Are you talking about a situation where the bank accepts less money than was owed on the mortgage to close out the mortgage, so the amount of debt forgiven by the bank is considered as income?

[CanonRay]

5. It's called "forgiveness of debt"

and it is considered "income" by the IRS. A good friend of mine short-sales her home and got hit with a 3K tax bill by IRS. She had to borrow money from me to pay it.

[xiamiam]

6. probably works like this

someone bought their house for 100k. put down 20%...over the course of time, refinanced and put on a new roof and a new kitchen...and now they owe 150k...but the house is worth 70k..so they've lost their initial investment of 20k..but they actually borrowed 50 k more which they put into the house...which they also lost..i think thats where the irs is going to come in...on the borrowed 50k..

the bottom line is that individual families nationwide are penalized and displaced for an event which was out of their control..this is not a little blip in the housing market..anyone who bought a house in the last ten years has lost their initial investment..the only ones who are safe are those securely employed and those who bought a house more than ten years ago...

[Cass]

7. Yes, the amount of debt forgiven is considered income in many cases...

Those who go through a short sale can end up owing the IRS.

Before you consider this option, you need to be sure that you are not opening yourself up to a tax trap. One problem is that obtaining a reduction in your debt is considered income that stands all by itself. You must frequently report it as a separate transaction and will receive a 1099-C form reminding you of this.

The "C" refers to "cancellation." Unless you meet certain exceptions, such cancellation of debt is treated as ordinary taxable income.

http://ezinearticles.com/?Income-Tax-Problems-Relating-To-Short-Sales&id=880139

[xiamiam]

8. k

[Goldstein1984]

9. It isn't a "short sale" but we're doing something like it...

Soon, we hope.

We own a home in a small town of 1500 people in the Midwest. We never plan to return there. We're allowing our son to live in the home, but he'll be leaving for the Army soon. As soon as he doesn't need it, we plan to sell the home as quickly as possible.

We owe about $70K on the home, originally appraised at $100K, and we put about $50K into renovating and updating the 85-year-old home. If we were willing to sit on it awhile, we could probably get about $150K or for it, because the home is completely modernized, but, except for a state-of-the-art kitchen and main from bathroom with a whirlpool tub, retains the period style. However, it could take a year or more to sell in the current economy, and the future of the economy is uncertain. We plan to put it on the market for $120K to move it fast, and we'll take $110K. We'll be losing $30K to $40K of what we have invested, but our financial advisor believes another meltdown is coming, and we don't want to be stuck with the house or end up upside down in a really bad economy. I work in an industry that requires a security clearance, and bankruptcy, or even a bad credit score, could impact my ability to maintain my clearance and work on key projects.

Here is the controversy: We're having to use a realtor from a neighboring town to sell the home because the three realtors in the town where our home is located refuse to participate in "undermining local home prices." We just think we're going to be letting someone have a great home at a great price while simultaneously letting us move on with our lives.