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empireRus · Joined: 26 May 2009 Posts: 1 1.00 Dollars($)

Hi. Can anyone explain to me the "Public Law #110-343"?
What is the law that prevents lenders from seeking a deficiency judgement after a short-sale? (Owner occupied properties).
Form 1099-C:how to avoid it.

smithsussane · Posted: Tue May 26, 2009 7:33 pm Post subject:

Hi empireRus,

As far as I know, Public Law 110-343 also known as H.R. 1424 prior to enactment was signed into law by U.S. President George W. Bush on October 3, 2008. This law created a $700 billion dollar Troubled Asset Relief Program under the Emergency Economic Stabilization Act of 2008.

As far as short sale is concerned, most of the lenders will sue you for the deficient amount resulting from the sale of the property. However, in some cases, the lender may forgive the deficient amount. In such a situation, this forgiven amount will be considered as your income and you will receive a 1099-C for that. If you pay off the deficient amount, then you won't receive 1099-c.

Feel free to ask if you have further queries.

Sussane

Guest

Thanks Sussane Smith for replying to my question. I thought that if a person lived in the house which was the subject of a "Short-Sale" (pre-foreclosure), in other words "Owner Occupied", the lender could NOT seek a deficiency judgement and/or send out 1099-C to the home owner and/or the I.R.S. If this is true, I need to find out the public law that backs my statement. Thanks/Gracias

jameshogg · Posted: Wed May 27, 2009 8:04 pm Post subject:

Hi empirerus,

I haven't heard of any such law which says that if the property is owner occupied, the lender cannot go for deficiency judgments. You can contact a lawyer and check out the laws of your state. Do keep the community posted regarding the issue.

Thanks

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