Expert: Michael Brotherton - 11/11/2007

Question
Like many, I am upside down on a condo I own in Floria.  A year ago I was transferred overseas to China to work and have been trying to sell my place ever since.  I can continue to afford to make the payments, but am facing a sever negative equity situation, and do not wish to continue to make payments into a money losing asset.  The outstanding mortgage is $320k.  As part of my relo package the company offered to purchase at $200k and work with the lender on a short sale solution, however the lender countered at $240k.  I am considering foreclosure but would like to further understand the risks (credit score doesn't bother me as I am overseas and don't plan to return anytime soon).  In Florida, if I have a non-recourse loan, can the lender come after me, or do I just walk away?

Also, I am aware of the 1099 IRS Short Fall issue, is there a threshold on the value of the sales price which would not apply to 1099 rules & regulations?

Thanks,
Ryan

Answer
You may ask the lender to take a "Deed in lieu of Foreclosure". This may release you from the remaining balance. You will have to submit financials and a hardship letter showing them why you need to do this. I would say you have a legitimate reason.

As for the 1099, have a CPA do your taxes and they can get you out of paying income taxes on the forgiven debt. Keep in mind that most lenders will not come after you for a deficiency, they will forgive the debt.

All this is negotiable. If  you end someone to intervene for you I will be happy to help. This is what I do.

Thanks and good luck.

Mike