Possible Short Sale Opportunity
I am in negotiations with a family that's in foreclosure and I am about to acquire th property subject-to. I'm catching their payments up.
The appraised value of the property is 225K.
The amount owed after miscellaneous penalties (20K) is approx 185K. They have initiated a workout where the penalties (20K) will be rolled in as principal.
Is getting those 20K in penalties eliminated considered a short sale and how long does a typical short sale take to complete?
Also, the family is wishing to rent/lease property for 12-18 mos and then buy it back. Is there any ramifications for doing that.
Thank You
Karl
"Is getting those 20K in penalties eliminated considered a short sale"
No, that's not a short sale. For a short sale to ocurr, the property would have to be sold, and the mortgage(s) paid off.
What you have is a type of loan workout.
[addsig]
Thank you, Pro,
Can the 20K still be considered "forgiven debt" by the IRS or not? That may be a better questuion for CPA.
Karl
As described, it is not forgiven debt. It isn't being forgiven if it's tacked onto the end of the loan.
Forgiven debt is just that, forgiven. Written off.
[addsig]