Q: I’m employed in the real estate industry, which means I’m no longer employed. I would love to keep my house, but have no income right now and I have not made a mortgage payment in five months. I understand that my lender will not likely modify my loan until I find another job. Based on that, I would like to put my house up for sale and do a short sale, but my lender said they will issue me a 1099 and that the mortgage debt they write off is taxable income to me! I can’t afford to pay taxes on hundreds of thousands of dollars. And what happens to all the back property taxes I owe if I do a short sale? Do I have to pay them?
A: Many of the very best Realtors and mortgage professionals have taken pay cuts or lost their jobs due to the recent changes in the market. One of the least reported impacts of the drop in home values has been the impact to an entire industry whose pay is based on a percentage of the value of the properties they help sell or finance.