Posted on: 03rd Jul, 2009 08:32 am
We have an offer for our house that would require us to bring $13000 to the closing. I can't come up with this much money. Can I negotiate with the bank to "forgive" the difference? Any other options you can share would be appreciated.
Yes. It would cost them that much to foreclose.
Hi Bierte,
You can definitely negotiate with the lender and request them to forgive the difference. With the way the economy is, the lender is likely to be happy with whatever money they get from the sale. Otherwise, if the house does not sell, they will have to foreclose on the property and that will cost them some money for sure. The money, they forgive, will be taxable. However, you can claim exemptions under the Mortgage Forgiveness Debt Relief Act.
You can definitely negotiate with the lender and request them to forgive the difference. With the way the economy is, the lender is likely to be happy with whatever money they get from the sale. Otherwise, if the house does not sell, they will have to foreclose on the property and that will cost them some money for sure. The money, they forgive, will be taxable. However, you can claim exemptions under the Mortgage Forgiveness Debt Relief Act.
Short sales such as you describe are quickly becoming the normal situation in many areas. Be sure to talk with your tax adviser to make sure you qualify not to have to count the forgiven amount from your mortgage as income. You should also prepare your buyers for the bank to take a LONG time to approve the short sale.
