Deficiency Judgements?
Other than letting the seller in foreclosure know that they're possible, has anyone had experience where the lender actually followed thru with them, and how did it effect your deal? Also, how often do these lenders actually just write off the loss from the short sale, and initiate those 1099's? Thanks...
In my experience, (doing shorts since 1979) the foreclosing lender will either forgive the debt, triggering an IRS form 1099, or release their security interest (mortgage) but seek to enforce the promissory note either amicably, or by seeking a deficiency judgment.
If they still can't collect on the deficiency judgment, they can/do write off the loss... and then can issue an IRS form 1099.
As has been discussed, simply because the former homoewner gets an IRS form 1099 doesn't mean that there will be a liability to pay income tax.
[addsig]