Thank you all for your 2 pennies. Really. It’s not exactly playdate conversation material, so I appreciate the discussion.
It was our primary residence (:(), we did a cash out refi on the second loan only to pay for the landscaping. Looking back… incredibly stupid. I could have planted the trees myself and poured a little concrete. At the time we had never heard of recourse/non-recourse and how this would change it. We had to wait 6 months on a list to get our home, wait for it to get built, etc. etc. We moved out 4 months prior to the short sale itself to secure a good rental and we did not rent it out. That would have been slimy. At least in my book. The main loan was resetting to a phenomenal variable rate so much higher than the going rate it nearly doubled our payment. We could have easily afforded a 30 year fixed on the full amount, but nobody in their right mind would refi our loan with negative equity over $250,000. Don’t blame ’em. We were shopping rates right after we moved in and waited too long on that first loan. We thought we had loads of time. Ha.
We haven’t actually been sent any 1099’s. I’m expecting one on the first mortgage, and have no idea how to plan for the 2nd. The bank just keeps calling acting like there was no short sale event at all (BofA). So how do we plan for it tax-wise? My biggest fear is garnishment. That would throw a wrench into all of our budget/debt payoff plans for sure. That’s what led me to post on this blog now… (You’re right though. If I was an investor I would not be soliciting advice here. It would be my business to know this stuff beforehand. I wish I had prepared like an investor before we took the plunge 5 years ago!)
The short sale/bank communication stuff is something for an attorney, likely. We just need someone to help us figure out our tax forms for now, the rest is on us. But I love to hear what ya’ll have to say about everything. Lots of wisdom to be had. After what we’ve been through I’m putting my kids through a “real estate school for dummies” before they graduate, so they don’t repeat our mistakes.
