Upside Down Mortgage

Mortgage Forgiveness Short Sale

Question: If i short-sale my house for $200K and i owe $425K on my mortgage do i still have to pay the difference?

My mortgage is $325k 1st loan & $107k heloc. Do i still have to pay the difference to my lender? Can they go after me even if i qualify for debt forgiveness?

Answer: A short sale requires permission of the lender, otherwise you have defaulted on your loan, so without their permission you would have to pay the difference.

The good news is the IRS just ruled that you are not liable for taxes on the amount of the loan forgiven by your lender.

New Tax Rules for Short Sales - Foreclosures

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