Northern Virginia Short Sale Quiz: Question #7
Sometimes I feel like a caped crusader in the fight for a true understanding of what a Northern Virginia Short Sale is and how it works. Not only do buyers and sellers have a hard time understanding the ins and outs of a Short Sale, but so do real estate agents who have little to no experience with them. As a fun way to get some misunderstandings on the subject cleared up, I've created this Northern Virginia Short Sale Quiz. We've already have question #1, question #2, question #3, question #4, question #5 and question #6. So if you've missed those, please take your time and click the links to start testing your Short Sale knowledge.
Now on with the next Northern Virginia Short Sale question.
A Short Sale Agent is working with three Short Sale Sellers in the summer of 2012. Each will go to settlement before the end of November 2012 and the mortgage companies are forgiving the outstanding balances
. As their agent, she needs to advise each of them to seek legal and tax advice as Short Sales can carry undesirable consequences. Her clients in a nutshell are as follows:
Joe is selling a home that he has lived in since 2007. He owes $300K on a first trust and $75K on a second trust. The net proceeds of the sale his home are going to be $330K. His first trust was used to purchase the home and the second trust was used to add a $40K deck to it and put a $40K down payment on an investment property that he lost to foreclosure last year.
Ray & Rachel are selling a home they purchased, and lived in since 2010. Their mortgage balance leftover from the purchase of the property is $200K and the net proceeds of the sale will be $190K.
Bob & Jane are selling a home they have lived in since 2004. They have two mortgages, one was used to purchase the home, the second was used to buy their much desired sailboat and pay for their various trips in the boat. The net proceeds of the home are $300K. The first trust principal balance is $400K and the second trust principal balance is $100K.
Susie is selling a home that her sister lived alone in since 2000. Susie co-signed for the loan as her sister didn't qualify for the loan on her own. Her sister passed away six months ago. The loan balance is $150K and the proceeds from the sale of the home will be $120K.
Which of these clients is NOT exempt from tax ramifications of the Short Sale under the Mortgage Debt Forgiveness Act?
A) All of the above
B) None of the above
C) Ray & Rachel
D) Joe, Bob & Jane and Susie
E) Bob & Jane and Susie
The answer will be posted tomorrow in the comments.
To go to Northern Virginia Short Sale Quiz: Question #8, click the link provided.
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