[Southack]

Banks don't hold the mortgage notes on lots of homes...lenders like Fannie Mae do, as do investors like sovereign wealth funds and hedge funds.

Forcing Fannie Mae, Freddie Mac, and FHA to do short sales is one thing...forcing hedge funds and sovereign wealth funds quite another.

[ridesthemiles]

When a seller sells their property in a short sale-——they are still responsible for the balance on the mortgage that is not satisfied.

If you have a $200,000 mortgage on your house and it is sold in a short sale for $150,000.....you still owe the bank $50,000.

IF the bank is forced to write this balance off by the government, it severely will impact their balance sheet-(assuming there are other short sales). Legally, then, the balance which the bank takes a write off on can be declared income to you and you would have to pay taxes on that $50,000.

A short sale is no free lunch.