Example, if loan amount is 200,000, house sales for 180,000, does the seller have to pay back the 20k the lender took a loss?

I bought a book on short sales but it doesn't mention anything(at least not yet) about the loss amount.

meant to say 20k.

I'm not exactly understanding where the $80k figure is coming from.

But regardless:
You have to get clear title to transfer the property (unless the buyer is ignorant enough to accept a title with defects on it).

If the lender has a $200k loan against the property.

You have to pay the lender, in order to get them to execute a release. You can try to negotiate with the lender into a lower amount in some circumstances.

But you still have to get them to execute a release to provide clear title.

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Oops, I meant 20k.

It depends on what can be negotiated with the lender. If the seller has other assets/properties the lender can put a lien on, they might agree to do that. They might agree to take an unsecured note for the difference, if it is relatively small. Either of these options would result in a better situation for the buyer's credit, since they would not result in a write-off on their credit history. If the lender writes off the difference, it will go on the seller's credit history, plus current law makes the write-off amount taxable by the IRS, which some in Congress are trying to change.

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Ron Goodman, GRI, REALTOR®
Prudential Colorado Real Estate
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Bump.

Ca6898;

We don't bump posts here. But that having been said, the loss that a lender faces can be handled a couple of ways. In our area lenders seem to be writing off the loss and making it a form of income to the borrower. This DOES affect their tax situation.

In other cases, they do not do this and there are no tax consequences. It does vary. It is important to consult with someone knowledgable in your region. If you are in Texas, I'd take Mike up on his offer...

Best;

Eric

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