1099's and Deficiency Judgements

Does anyone know how to keep banks from suing their clients for the amount they are losing during short sales? I know that some banks dont ever come after the borrowers but there are many investors/people out there promising the homeowners in default that they can keep the bank from coming after them.

Thank in advance!

You mention two things - 1099’s and deficiency judgments. A lender will issue a 1099 for cancellation of debt upon doing a short sale. And even if they don’t - the mortgagor is still legally responsible for any taxes associated with it. See IRS Publication 544.

As far as deficiencies go, laws vary by state so you need to understand what a lender can and cannot legally pursue in your area.

Investors promising they can “keep the bank from coming after them” are either feigning some imaginary technique when in fact they know there is no legal deficiency option - or they are lying.