DEAR BOB: Due to my husband's job location change, we had to sell our house in Michigan where the home-sale market is very slow. His employer offered no relocation benefits, but at least my husband has a job. After listing our home on the market for six months with no purchase offers, we were unable to keep up the mortgage payments and defaulted. The realty agent suggested a "short sale" for less than the mortgage balance. Rather than foreclose, the mortgage lender agreed to accept a purchase offer for about $16,000 less than the mortgage balance. We were happy to get rid of the house and its mortgage. But then we received an IRS 1099 form showing $16,000 taxable income to us. Is this a mistake? --Helga H. DEAR HELGA: Unfortunately for you, it's no mistake. When a mortgage lender agrees t...
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