There have been so many news articles about homeowners walking away from the financial obligation to their mortgage. In response, there has been a lot of opinions about how these homeowners are not taking an ethical stance and avoiding their responsibilities. The result will be billions of dollars spent by the U.S. government to aid lenders and homeowners until the housing market stabilizes. Ultimately, this means the nation as a whole will be responsible to helping the housing market through higher taxes.

Besides the ethical attempt of meeting your financial obligation to the lender, there are considerable benefits a homeowner who completes a short sale.

1. Get $1500 – A new law has passed that allows some homeowners receive $1500 from the government from a successful short sale. The transaction would need to qualify under Obama’s new legislation published January 2010.

2. Improved Tax consequences – A lender may exercise the right to issue you a 1099 to collect the uncollected mortgage amount of a short sale. If the homeowner qualifies, they could be exempt from this 1099 under the Mortgage Forgiveness Debt Relief Act of 2007. Some lenders have stated that a 1099 most likely would not be sent out if the financial status reported in a short sale submission proves to be difficult to collect any future debt. Keep in mind that collecting the debt is costly and sometimes these bad debts are sold off to collection agencies for pennies on the dollar. Sometimes the deficiency can be reduce by the lender or the collection agency.

3. Protect your Credit History – There have been ongoing debates on how a short sale will actually affect your credit report. The fact that a short sale was concluded instead of a foreclosure should show that the borrower did something to redeem themselves. The stance of the major credit bureaus is that they are likely to see a short sale the same as a foreclosure. The reality is each persons credit history depends on how the creditor reports your credit performance. Some homeowners have reported getting a "Paid in Full" or "Satisfied" on their credit report after a short sale. When negotiating a short sale, it is possible to request removing any mortgage lates as a condition of the short sale.

The importance of credit is many times overlooked in the eyes of a financial distressed homeowner. Most of the time if they are about to lose their home, other bills aren’t getting paid because they are trying to save money to move out of the home and find a new home. Protecting your credit score allows you a short time to wait for your score to increase, also, it affects any reliance on credit cards, auto loans, getting approved to rent an home, etc.

It is recommended to always seek professional advice before making a decision to go through with a short sale. Every situation is different and decisions must be well thought out to receive the best outcome. Seek a Bankruptcy Lawyer if you are considering bankruptcy. Seek a Tax Attorney or Real Estate Attorney to understand your legal rights and tax consequences. Real Estate agents can help you list your short sale but they are usually not qualified to provide tax and legal advice.