OK, I must have missed a message, notice or something. I was just told that Bush on top of the 30 day extension for foreclosure clients to get the affairs settled has also signed in to legislation that the bank no longer can issue a seller a 1099 for the deficiency of a loan.

I knew something like this was in the works and I was trying to keep an eye out for it but I mussed have missed it.

Can any of you tell me if any of you have a link to this information? I have a very uncooperative seller and this might help to get her moving in to the right direction.

I think it has less to do with the bank sending the 1099 and more to do with the seller not being taxed on the forgiven debt. I can't remember the exact numbers, but it only applies within a certain time period. Maybe check IRS.gov?

It applies to owner occupant homes NOT investors that bought homes BUT for them there are other ways to get around paying the tax with a good cpa.

no legal advice

Bush did sign the new legislation that makes the 1099 issue retro-active to Jan.2007. I believe it expires Dec 31 2009 or 2010. The Bill was signed in mid summer of 2007. It allows the homeowner to avoid the tax liabilty of the short sale, however I think you need to seperate the debt itself. The legisislation deal with taxes, not to say the lenders has to forgive the debt. Theres been situations where unsecure loan were put into place for debt balance as part of the short sale accepted by the lenders. Certainly the seller needs to get in writting that the bank will not pursue the debt balance thruough other means.

I question the issue with mult-family homes. Does it apply fully or just to the unit the home owner resides in. Similar to 1031 exchanges, the secord or third unit are income producing (generally)thus not the primary residence. I haven't got a clear answer on that.

So it applies to he tax liability not the loan debt-two seperate issues.

Link to the NAR press release on the subject of short sale and foreclosure:

http://www.realtor.org/press_room/news_r...orgiveness.html

Legislation was signed Dec. 20, 2007, and it applies to principle residence for homeowner. My understanding is that the forgiveness applies to short sale losses as well as foreclosure losses.

A tenant (as well as the owner, I assume) would still get a 1099 for cash for keys.

not legal advice, just my interpretation

The tenants sure get the short end of it. In addition to losing their deposit to the landlord, they get taxed for getting the equivilent of that or much less for moving expenses.