As has been noted here, California will no longer allow dual tracking of loan mods or short sales with foreclosure actions as of Jan 1st.So banks are cancelling many foreclosures in California.The not uncommon practice of foreclosing the week or day before a short sale was scheduled to close is no longer going to happen.
And the law exempting the debt forgiven in a short sale from taxation as ordinary income will expire Jan 1st unless it is extended by congress. And given the political mood, that seems unlikely.
So what will be the result when short sellers get the wake up call? I suspect most will stall the short sale as long as they can and then either let the house go in a foreclosure or file bankruptcy, depending on their financial condition and good sense or lack of it.
Is that unethical, or simply a necessity given their circumstances? I won't judge them harshly, especially since the banks have turned into overtly criminal enterprises and the government seems to have been completely captured by special interests.
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E-Man, if you don't think Banks are overtly criminal I suggest you read the audit of foreclosures done by the SF assessor/Recorder Phil Ting or maybe spend a little time reading a few of the depositions linked to at Foreclosure Fraud blog.
Doc-x, david stern, the Magnetar deal. Read Yves Smith's book "Econned".
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