Wander of wanders...Short Sale was approved...we actually go to closing at the end of the month. While initially taking a very hard line and making us sweat over the timeline it will be exactly 2 months from initial offer to closing...of course the first being very close to foreclosing may have had something to do with the quick response but I prefer to believe that our AWESOME realtor (who only gets 2.5% for her hard work) was the reason for the timeline.

The point of the post however is in the fine print of our short sale approval letter...It states that we will receive a 1099C "cancellation of debt" in the amount of the deficiency which is $60K. We very clearly stated when we wrote our hardship letter that it was our intention to pay back every single dime we owed and of course signed a promissory note to that effect so essentially there is no "cancellation of debt." We are on the hook for the $60K paid back interest free for the next 12 years (only 2 years longer that the original 15 year note).

I spoke to a "tax expert" at the IRS and he stated that we had 2 options...fight it now and risk losing the sale or just let them send the 1099C and when tax time rolls around do NOT add this to the 1040...instead attach a statement of explanation along with HUD statement showing deficiency and a copy of the promissory note showing that we are paying back the entire amount of the deficiency. This will according to him initiate an investigation of the bank that reports this as a cancellation of debt. It should be pretty obvious which option we are choosing.

We have no intention of buying a home while my hubby remains active duty...I guess in a sense we are giving in by doing that but our situation was mild compared to some of those I have read on here and it is pretty obvious that our elected leaders believe they have all the time and money in our pockets to fund garbage programs and they have very little time or money to find a better workable solution for our men and women in uniform than HAP.

We decided when trying to rent at our new duty station that we were specifically going to only rent from another military family experiencing the same problem of having PCS orders and we have been lucky enough to find such a family and are fortunate that they are willing to overlook the credit problems our home brought us and rent to us anyway since they could have easily found themselves in the same boat.

I will not forget the support these boards provided in the darkest moments of this mess...THANK YOU JOE and FORUM SUBSCRIBERS. I am not giving up either with my barrage of letters to those on the hill!!!!!!!!!

That is certainly good news, and congratulations! And thanks for the kind words. We are convinced that it is critical for Military Families "hung out to dry" in this mess know that they are not alone, and in fact, in excellent company, that of other Military Families. They also have the opportunity to exchange information and ideas...and actually help each other! So, thank you for your contributions and determination to assist others by renting their homes.

It is my understanding that there is a moratorium on federal taxes on the 1099 amounts for this year, and it is expected that it will be extended. I have checked with two CPAs on this and both agree...but that doesn't address what individual states may do. That said, I must defer to IRS experts and accountants and encourage anyone who reads this to verify the info.

We hope you continue to participate on this forum and wish you the best! Joe

Thank you so much for renting from other military! We are majorly upside down on our Florida home, PCSing to Okinawa in 2 weeks! We are too upside down to refinance, missed the HAP cut off by 4 days, BUT have been fotunate to rent our house to another military family caught in the same boat. We will be able to keep our heads above water - regardless of the help lacking from the politicians.

ALL us military should ban together to support each other.

Wouldn't worry too much about missing the HAP window. There is more evidence growing that the HAP is basically Hapless and Helpless. I hate to be such a cynic, but it is becoming clear that it is a very ill-conceived program that will help very few if any.

We are firm believers in Military helping Military. We encourage everyone to take advantage of our free advertising service on www.moresam.net where you can advertise / find rentals and for sale by owners.

Joe