San Diego, CA Short Sale


San Diego County has been inundated with people who cannot afford their mortgage payments, cannot refinance because their home value has dropped, and think that foreclosure is the only option. Foreclosure is not your only option. We are California Lending & Realty and we’ve helped a number San Diegans just like you.


Your lender does not want to foreclose on you. They are not in the real estate business; they are in the lending business. They would prefer that we sell it (through a short sale) to get it off their books (even at a loss to the lender) than continue having that money tied up without producing revenue.

What is a short sale?

A short sale occurs when a property is sold and the lender agrees to accept a discounted payoff. This means that the lender will release the lien that is secured to the property upon receipt of less money than is actually owed.

Example: You have a mortgage of $300,000 but the home is only worth $250,000. You are “short” $50,000 (not including fees, title/escrow, commissions, etc.) The $50,000, plus fees and commissions are paid/absorbed by the lender!

Why will the lender pay the fees and commissions?

The lender has not been receiving monthly payments on the $300,000 it has lent you. It will take a few more months to foreclose on your home. That means a few more months of the lender not receiving monthly payments and incurring other holding costs. When they do finally take over your property, they will have to pay the realtors a commission when they sell it. We are not only helping you avoid foreclosure with the short sale, but also helping the lender by selling the property several months before they typically would.

Credit Scores

A short sale is considerably less detrimental to your FICO scores than that of a foreclosure. A short sale on your credit report will most likely show that the debt has been settled. A foreclosure will stay on your report for seven years and would make your next home purchase much more difficult. If you recall when applying for your last home loan, the loan officer asked whether you had ever been foreclosed upon, not if you had ever been through a short sale.

Tax Benefits

Normally, you would be taxed by the IRS for the amount “forgiven” by your lender. Now, with the Mortgage Forgiveness Debt Relief Act, you may not owe the IRS anything for the amount forgiven!

The Mortgage Forgiveness Debt Relief Act of 2007 (H.R. 3648)
What is it?

The Mortgage Forgiveness Debt Relief Act of 2007 was enacted on December 20, 2007. Generally, the Act allows exclusion of income realized as a result of modification of the terms of the mortgage, or foreclosure on your principal residence.

What does that mean?

Usually, debt that is forgiven or cancelled by a lender must be included as income on your tax return and is taxable. The Mortgage Forgiveness Debt Relief Act of 2007 allows you to exclude certain cancelled debt on your principal residence from income.

The Mortgage Forgiveness Debt Relief Act is only applicable through December 31, 2012. You need to act quickly in order to take advantage of this opportunity.

California Lending & Realty is a real estate company that specializes in San Diego Short Sales. We are not accountants or lawyers, nor do we dispense legal or tax advice. We strongly encourage you to discuss with your lawyer and/or CPA the implications of doing a short sale. You can also go to the IRS website (irs.gov) to learn more.

The San Diego real estate market has been hit hard with the latest downturn. We are San Diego Short Sale specialists here to serve you. Please give us a call to help you avoid foreclosure, save your credit, and provide the possibility of walking away from your home with no mortgage debt or tax consequences from the IRS.

We are proud members of the San Diego Association of Realtors, California Association of Realtors, and the National Association of Realtors.

If your property is in San Diego County and you would like to know how you could benefit from a short sale, please give Michael Thomas a call (619-286-9400) for a free consultation.

California Lending & Realty is a division of California Lending Company Inc. and is licensed by the California Department of Real Estate (DRE # 01400067).