If a property is being sold as a Short Sale it means that the loan on the property is for more money than the property can be sold for. There is a shortage of funds due the lender. Sometimes a lender will forgive this amount and sometimes it will not. If the amount is forgiven it may not be a win for the seller because they may have to show this amount “forgiven” as income in their taxes the following year. It must be shown as income because it was money that was owed by the seller through a note to buy the property, but not paid back to the lender and the IRS looks at this as money in your pocket even though you never see the money.

I’ve been showing short sales listings lately.  I have a client who thinks theyre the way to go.  A good deal.  Bottom fishing.  Guess what?  They may not be all you think they are.  You may find that you’ll end up paying past due taxes. If Home Owner Association dues are past due the association [...]

unfortunately, these predator lending practices often took place against immigrants. People with fair income, some debt, but poor English skills who were placed into negative amortization loads that they did not understand. They were placed in loans with sucker rates — you know the kind — 3% for the first 90 days, and then the rate escalates upward. Some of those loans escalated up to 7 or 8%. Some of the people caught in this net find themselves owing more each month on the loan to their house, than they take home.