Being both a Realtor and an Investor, I have heard alot of talk lately about whether the banks will issue 1099s, won’t issue 1099s, will forgive the deficiency judgments or whether Federal Legislation will negate them. There is alot of speculation on this topic along with alot of misinformation. Well, if you are an investor who has a loan going bad or are a Realtor representing a client, I can tell you the 1099s are real and they’re here.
I represented a client who unfortunately lost his job about a year ago. He went through her entire savings to try and salvage his assets. Unfortunately he couldn’t. He had to sell his condo on a short-sale. This was an investment property for him. He had already done a short sale on his primary residence. The short sale on his investment condo was succesful. However, since he had already done a short on his primary residence, the lender informed him he would receive a 1099 for the defiiciency balance. In fact he did receive her 1099 last week in excess of $90,000.00.
As a Realtor, we had all of the documentation and disclosures signed regarding the deficiency balance. To protect ourselves as well as our clients, we must be informed and have all of the paperwork executed.
Investors also have to be equally aware that the 1099s are real. If you are considering letting a loan go bad, realize there are consequences that go far beyond the bad credit and foreclosure. Get representation and professional opinions from your Accountant and Attorney BEFORE your loan goes bad. They can advise you about the process and possible protection of your other assets.
Christopher McClatchey
Housing Market Realty
THM Investments, LLC
*Although I am a licensed Attorney in Brevard County, Florida, the information contained in this blog does not represent a legal opinion or legal advice.
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