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The recent financial crisis that was witnessed all over the world initiated in the United States of America as a result of the house bubble. Thus, Florida was not exception and therefore it was greatly affected by the United States of America housing crisis. Consequently, there are several people in Florida that are fighting hard to avoid loosing their houses through foreclosure. In an attempt to resolve these crises many such people in Florida are opting for a short sale of their homes. They are considering short sale option since it results to great profits to both the seller and lenders. Nevertheless, short sales in Florida are currently highly prone to fraudulent issues and thus not often accepted by banks. One instance where fraudulent happens in short sale is where realtors give several bids for a home that is up for a short sale. Unfortunately, the real estate agent does not reveal all the necessary information required. In such cases, the real estate agents provides only the higher offers, but does not give out the lower offers. Subsequently, the short sale of the exchanges hands at a lower price. This gives the buyer of the house an opportunity to buy the house at a lower price. The person who buys this house becomes the new owner of the house and is therefore at liberty to resell the house whenever he opts. In most cases, the new owner of the house opts to sell the house the same day at a higher price and gets quick profits that he/she shares with the agent (Sackrin and Tolchinsky Par.3).
In mortgages sometimes the property owner may opt to do short sale on the property. Through this process the lender willingly accepts to receive lesser amounts than the balance owed on the mortgage at sale. When this happens, the deficiency balance is ignored. According to the federal government, a creditor is expected to file a 1099C whenever it forgives a loan balance that is over $ 600. This translates to a tax liability for the former property owner since the loan balance that is forgiven is regarded as an income and should be taxed. In some cases, the mortgage owners are asking borrowers to agree to accept liability for the deficiency balance. This should not be the case in the normal situation because the lending party in this case the mortgage company should be the one that should take the responsibility for the liability of the deficiency balance. These mortgage companies are asking the borrowers to take the responsibility of the liability for deficiency balance as a strategy to make sure that they do not incur extra expenses through taxation when the mortgage company opts to sell the houses at a lower price than the balance owed by the mortgage at the time of sale. The mortgage considers reselling a house when the borrower fails to pay the mortgage payments. This results mostly when someone looses his/her job or when the mortgage loans are adjusted to higher interest rates such that the borrower cannot afford any longer to pay their monthly payments. When one defaults the mortgage payments, the mortgage company gives someone some notice. If he/she does not respond accordingly the mortgage company does not have any other alternative, but to take over the house which it can sell to another person. The chapter 7 allows for temporal disjunction that only lasts for a few months only (Jennings 56).
Works Cited
Jennings, Marianne, Real Estate Law, Cengage Learning, 2011 Sackrin and Tolchinsky. “Deficiency Judgments.” Web.
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