{"id":4826,"date":"2022-10-26T15:40:24","date_gmt":"2022-10-26T15:40:24","guid":{"rendered":"https:\/\/cloud03.titletapsites.com\/testblog\/?p=4826"},"modified":"2022-10-26T15:40:24","modified_gmt":"2022-10-26T15:40:24","slug":"consequences-of-a-short-sale","status":"publish","type":"post","link":"https:\/\/cloud03.titletapsites.com\/lawsite-c\/2022\/10\/26\/consequences-of-a-short-sale\/","title":{"rendered":"Consequences of a Short Sale"},"content":{"rendered":"<p>There are three main consequences of a short sale. Each can have long-term financial and legal consequences and must be considered carefully before entering into a short sale as a solution to missed mortgage payments.<\/p>\n<h2>Failure to Secure a Deficiency Waiver<\/h2>\n<p>As mentioned above, the completion of a short sale does not guarantee that the lender will give up on being paid in full. It is important to request a full waiver of deficiency in order to be fully exempted from repayment. However, the lender is not obligated to grant the waiver.<\/p>\n<p>This means that homeowners who have given up their homes and have moved may still be under obligation to pay back potentially tens of thousands of dollars.<\/p>\n<h2>Income Taxes<\/h2>\n<p>The amount forgiven by the lender may be considered taxable income by state and federal governments. The homeowner may be liable for paying income taxes on the waived deficiency amount.<\/p>\n<h2>Credit Report<\/h2>\n<p>A short sale will show up on a credit report, under the mortgage history as a special status that labels it as &#8220;settled,&#8221; \u201cnot paid in full,\u201d or &#8220;account legally paid in full for less than the full balance.&#8221;<\/p>\n<p>This information will remain on the consumer\u2019s credit report for approximately seven years and will cause a drop in the homeowner&#8217;s credit score. According to <a href=\"https:\/\/www.experian.com\/blogs\/ask-experian\/how-does-a-short-sale-affect-credit\/\" target=\"_blank\" rel=\"noopener\">Experian.com<\/a>, a short sale is considered settling a debt and will likely have a large negative impact.<\/p>\n<p>The impact on the credit score will depend on other factors such as the individual\u2019s initial credit score, subsequent payment history, and whether your lender reports a deficiency balance. If your lender does not release the \u201cforgiven\u201d balance, knowing as waiving the deficiency, then that unpaid balance can have a great impact on your credit history and score, similar to a foreclosure.<\/p>\n<h2>Summary for Short Sales<\/h2>\n<p>There are many legal and financial consequences of a short sale that can stay with a homeowner for years after the sale of the property. Before entering into a short sale as a solution to a difficult situation, it is important that homeowners understand the timelines, obligations, and liability of this type of transaction.<\/p>\n<p><strong><a href=\".\/real-estate-attorney\/\">Browse more real estate law articles<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>There are three main consequences of a short sale. Each can have long-term financial and legal consequences and must be considered carefully before entering into a short sale as a solution to missed mortgage payments. Failure to Secure a Deficiency Waiver As mentioned above, the completion of a short sale does not guarantee that the&hellip;<\/p>\n","protected":false},"author":11,"featured_media":4913,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[42],"tags":[47,43,44,48],"class_list":["post-4826","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-real-estate-law-old","tag-for-sale-by-owner","tag-real-estate-attorney","tag-real-estate-law","tag-short-sale"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.7 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Consequences of a Short Sale - Law &amp; Title Company<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/cloud03.titletapsites.com\/lawsite-c\/2022\/10\/26\/consequences-of-a-short-sale\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Consequences of a Short Sale - Law &amp; Title Company\" \/>\n<meta property=\"og:description\" content=\"There are three main consequences of a short sale. 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