Home Builder Austin

why people stop paying there houses when they put in in short sale?

I have a friend that put his house for short sale but now his living in the house but his not paying. my q is the what happen when you put in in short sale?

Public Comments

1. Well, all the amounts he doesn't pay now are added to what he owes. Depending on whether the new law protects him or not, he gets a deficiency judgement or claim for "short" amount. He may get a 1099C which means he has to pay taxes on the amount "forgiven" by the short sale.
2. He is counting on the bank accepting a short sale before they foreclose. Your friend is an A$$, he is more likely to be foreclosed on and will end up owing more money.
3. People stop paying their payments because their banks will not negotiate a short sale until they are behind on payments. Banks do not consider it a short sale until the seller can not afford to make their payments...thus the seller has to stop making payments. Banks are shooting their own feet here!