Note: Lenders may seek deficiency judgments against former homeowners in Florida. Lenders on California properties may be barred from seeking deficiency judgments.
Also lookout for taxes due to the IRS for loan forgiveness.
Short Payoffs Pay-Offs and Redemptions - Short Sale by Jonathan A. Goodman, Esq.
Also note this quote, which is something that I mentioned in a previous blog.
"On the one hand, the lender will be reluctant to approve a compromise without having the ability to analyze the financial strength of your seller. On the other hand, if this information is provided, there are potentially grave consequences for your seller if a short pay-off is not approved. The lender will have a significantly easier time pursuing your seller for a post-foreclosure deficiency. In certain circumstances, providing the financial information actually decreases the likelihood of closing on the short pay-off.
A borrower with minimal assets, little income, and a willingness to file bankruptcy has little to lose by providing financial information. However, most candidates for short pay-offs have some assets, a good job with garnishable wages, or a desire to avoid bankruptcy. Candidates for short pay-offs need legal advice regarding the advisability of submitting financial information to the lender. Though a refusal to submit financial information to a lender greatly decreases the chances of closing, a refusal to submit financial information does not necessarily preclude closing on a compromise sale."