homeowner in short sale

Hi all.

I have some questions. I am in the middle of a divorce, lost my salary income and now can not afford my home. I am a 740 plus fico with two loans with Chase. They are A paper loans in CA. and when I call them letting them know that the house is on the market for a short sale they of course tell me to call back when I have a buyer. I am 30 days late as of 01/31/2008. I have been following up on the new temporary tax relief law and called chase to see if this applies to me, of course they tell me that bill is only for sub prime borrowers. I am sure they are only telling me that to avoid me going into foreclosure.

So my questions are if I short sale they can 1099 the difference lost correct? If I foreclose they can also 1099 the difference lost? Chase told me that is what they do. They do not come after me with a collection but a 1099 in both cases.

Here is my whole argument on this. I cant afford the 3100 mortgage payment so I certainly will not be able to afford to pay the IRS $100,000-150,000 in taxed income either. I thought that if you foreclose that is it, it kills your credit and you are done. So now I am still gonna have to pay someone no matter what? I am trying everything I can to save this house and my credit and do not want to be told at the eleventh hour after my credit is crap that oh by the way you could have done XYZ and be fine.

Any advise on how to go about this would be great. I am not sure anyone can help me.

As you know, the bank requires an official offer to be placed on the property before they will discuss a short sale. I have delt with Chase on several occasions over the years on various levels. I have a simple formula I have adopted that always keeps things in perspective in regards to this company. CHASE MANHATTAN = THE DEVIL. Keeping this in mind while dealing with this company reminds me that nothing they say is true, while at the same time… it could be…

Chase is obviously my least favorite of them all. I have nothing but contempt for this company. My bitterness stems from an ungodly number of hours I have spent interacting with them, the standard unhelpful and disrespectful employees, the common lack of professionalism throughout their ranks, and their blatant practice of ‘railroading’ their own clients…the borrowers.

I believe you have made a wise choice in contacting the bank and informing them of your situation. I would advise you to maintain contact with them no less than once per month from here on out until the situation is resolved one way or another. Of course any changes to your situation should be considered and reported to them in a timely manner. Your keeping them up to date on your situation can greatly help a short sale offer, should you find one.

I have known Chase to tell me that they WOULD NOT be filing a 1099 on a homeowner for the difference they discount, then they do. At the same time, I have also knows Chase to tell me that they WOULD be filing a 1099 on a homeowner for the difference they discount, and they never do. My guess as to why this happens is that the right hand doesn’t know what the left hand is doing. Chase is so large that they have different departments that handle different things. One department may be handling the short sale offer while another department is responsible for issuing the 1099’s.

If I were in a situation resembling yours I would work diligently toward a successful short sale. I would advertise, “MAKE ME AN OFFER” everyplace I could. I would list with a Short Sale Friendly Realtor IMMEDIATELY. And I would hope for the best with the 1099. I do not know how the new ‘Phantom Tax’ Relief works nor who it applies too, but I would probably seek legal advice on that matter.

GooD Luck! :beer

BTW, where does your soon to be ex stand on a short sale? If they are on the mortgage note then they will need to sign some papers in order for a successful short sale. If they are not cooperative then they could botch the whole deal.

GooD Luck! :beer

thank you for your response. I have a Realtor with a short sale dept working on it too. lots of traffic, but nothing so far. The soon to be ex is cooperative in getting rid of it at no cost to him of course. I will definitely keep calling them and updating them on the status. Thank you for the help!

Not a problem. Good luck and let us know how it works out for you!

I am not an accountant or an attorney but my understanding of the new law is that if this home is your primary residence you are exempt from 'phantom income" up to $2 million. However, if it is an investment property you may still be exposed. However if you can prove insolvency you are also expempt from the 'phantom income" aspect of a short sale or foreclosure.

The advice that Foreclosure Negotiator gave to you is excellent and my experiences with Chase over the years does alling with his. They speak with forked tongue. Get anything they say in writing.

Good luck in finding an end buyer so you can proceed to try a short sale on the property.