The double billing bill
Oregon lawmakers seek to pass a bill that stops banks from claiming a loss on a short sale and still collecting the money later from the borrower.
Homeowners get the 1099 from the bank, pays taxes on the bank’s loss and is still collected on by the bank after the fact, typically through collection agencies or even lawsuits, thus they are being “double billed.”
Oregon State Representative Jason Conger told KBND talk radio that the House Bill makes the bank chose one option and not do both: “A bank still has the right under the contract unless they waive it to try to collect the residual debt from the borrower and this bill prevents the bank from reporting it as income to the borrower and trying to collect the debt.” Conger says to his knowledge this practice isn’t very widespread, but definitely needs to be dealt with.
The House Bill now moves to the Senate and is likely to pass. Is double billing legal in your state? Tell us in comments the state of affairs in your location.
Benjamin Ficker
May 3, 2011 at 12:32 am
I was told early on to request for confirmation of the 1099 because if they ever did pursue for deficiency, and you ended up in a lawsuit, it could prove to be ambiguous on the banks intentions and get the deficiency thrown out. We've never actually had to go that far though, so who knows how that would play out.
MH for Movoto
May 3, 2011 at 11:54 am
Not sure what the current legal standing on this is in California, but I agree with this bill 100%.
Joe Loomer
May 4, 2011 at 3:11 am
Hmmm, I was under the impression that an Indianapolis (may have the city wrong) lender was actually buying toxic mortgages, offering short sales, selling the homes, and then actually recouping the loss in bailout funds from the government – thereby actually making a killing off of the bad mortgages which would have defaulted anyway. Predators come out when opportunity knocks. The housing boom gave birth to predatory lender growth, the housing bust is just changing their stripes.
Navy Chief, Navy Pride