Short Sale Agent in Jacksonville, Florida

A short sale is selling your house for less than you owe on it, with your lender agreeing to accept the shortfall. Title transfers, the sale price isn't enough to cover all the liens and the costs of the sale, and you don't bring the difference to closing in cash.

That's the whole definition. Everything else is detail about who agrees to what, and when.

I'm Jim Armstrong. I'm a REALTOR® with Momentum Realty in Jacksonville, and I'm SFR® certified. That's Short Sales and Foreclosure Resource. Short sales are the piece of this business I actually do.

This page is the plain version of how they work in Florida. There's one part of it that changed on January 1 of this year, and most of the pages you'll find on this subject haven't caught up.

The Tax Rule Changed on January 1, 2026

Start here, because it's where the goalposts got moved.

When a lender forgives debt, the forgiven amount is generally income to you, and you can get a Form 1099-C for it. For years there was an exclusion that covered mortgage debt on your main home. It's in the tax code at 26 U.S.C. § 108(a)(1)(E), and it came out of the Mortgage Forgiveness Debt Relief Act of 2007. Congress extended it over and over.

Read what the section says now. The exclusion applies to qualified principal residence indebtedness that is discharged:

"(i) before January 1, 2026, or (ii) subject to an arrangement that is entered into and evidenced in writing before January 1, 2026."

That date has passed. As of this writing, no further extension has been enacted. So a discharge happening now doesn't reach that exclusion unless it's tied to a written arrangement that was already in place before the first of the year.

A lot of pages about Florida short sales still say some version of "thanks to the Mortgage Forgiveness Debt Relief Act, you probably won't owe tax on the forgiven amount." That was reasonable advice for most of the last two decades. Right now it's out of date, and the difference between the old rule and the current one can be a real number on a real return.

Two other exclusions in the same section did not expire, and they're the ones that matter now.

Bankruptcy. Under § 108(a)(1)(A), a discharge that happens in a title 11 case is excluded. And § 108(a)(2)(A) says the bankruptcy exclusion takes precedence over the others.

Insolvency. Under § 108(a)(1)(B), a discharge that happens while you're insolvent is excluded. Section 108(d)(3) defines insolvent as the excess of your liabilities over the fair market value of your assets, measured immediately before the discharge. And § 108(a)(3) caps it: the amount you exclude can't be more than the amount by which you were insolvent.

Plenty of people going through a short sale are insolvent by that definition on the day it closes. Plenty aren't. It's an arithmetic question about your whole balance sheet, not just the house, and it's a question for a CPA. I'm not one, and I won't pretend the answer.

I'm flagging it because it's the difference between a decision made with the current rules and a decision made with the 2019 rules, and nobody should find out about this in April.

Don't take my word for any of it either. Take this to a CPA and let them check it against your actual numbers. That's not me covering myself, it's that the answer turns on figures I can't see.

What About the Rest of What You Owe

The leftover balance after the sale is the deficiency, and whether you're still on the hook for it is a separate negotiation from the sale itself.

Florida puts a ceiling on it. Under Fla. Stat. 702.06, whether a deficiency judgment gets entered is up to the court's discretion. For owner-occupied residential property, the deficiency can't exceed the difference between the amount owed, or in the case of a short sale the outstanding debt, and the fair market value of the property on the date of sale. If the county property appraiser's certified rolls show a homestead exemption was granted before the foreclosure was filed, there's a rebuttable presumption the property was owner-occupied.

Notice the Legislature named short sales inside that section on purpose. Florida law already treats a short sale as its own category, separate from a foreclosure sale.

What it doesn't do is waive anything for you. A lender releasing you from the deficiency is a term you negotiate into the approval, not something that happens automatically because the house sold. That release, or the absence of it, is usually the single most important line in the approval letter.

What It Does to Your Credit, With Actual Numbers

Most pages hand-wave this. Here are the published rules.

Fannie Mae's Selling Guide, section B3-5.3-07, sets the waiting periods before a borrower is eligible for a new loan Fannie Mae will buy. The Guide says outright that "preforeclosure sale" and "short sale" mean the same thing.

A deed-in-lieu of foreclosure, a preforeclosure sale, or a charge-off of a mortgage account carries a four-year waiting period from the completion date, and two years if extenuating circumstances can be documented.

A foreclosure carries a seven-year waiting period from the completion date. Three years is possible with documented extenuating circumstances, and additional requirements apply in that window. There's also a note worth reading twice: buying a second home or an investment property, or doing a cash-out refinance of any kind, isn't permitted until the full seven years have passed after a foreclosure.

Chapter 7 bankruptcy is four years from discharge or dismissal, two with extenuating circumstances.

Those are Fannie Mae's rules for conventional financing. FHA, VA and portfolio lenders set their own, and they aren't the same. But it's a real, published, checkable set of numbers, and it's the closest thing to a straight answer on the credit question that exists.

What a Short Sale Costs You

In most approved short sales the real estate commission is paid out of the proceeds the lender agrees to accept. It comes off the top of the same money the lender is taking a haircut on, so it generally isn't cash out of the seller's pocket. The lender approves the settlement statement, so that's their call and it gets settled in writing during the approval, not assumed at the start.

Florida is strict about people charging distressed homeowners up front, and the statute is worth knowing about whoever you end up working with.

Fla. Stat. 501.1377 governs foreclosure-related rescue services, meaning goods or services offered for money that promise help with stopping, avoiding or delaying a foreclosure, or curing a default. Under subsection (3), a foreclosure-rescue consultant can't begin those services without first signing a written agreement with the homeowner, and can't "solicit, charge, receive, or attempt to collect or secure payment, directly or indirectly" before all of the services in that agreement are finished. The homeowner gets three business days to cancel the written agreement with no penalty, and that right can't be waived.

If somebody's asking a homeowner for money up front to save their house, that section is the one to read.

Short Sale, Foreclosure, Deed in Lieu, Modification

These get treated as one blurry thing and they're four different transactions with four different outcomes.

• Short sale. You sell, the lender accepts less than the balance, and the deficiency is negotiated. Four-year Fannie Mae waiting period. You control the sale and the timing more than in any of the others.
• Foreclosure. The lender sues, and Chapter 702 of the Florida Statutes runs the case in circuit court. Seven-year Fannie Mae waiting period.
• Deed in lieu. You hand the property back without a sale. Same four-year Fannie Mae waiting period as a short sale, and the deficiency question is still its own negotiation.
• Modification, forbearance, repayment plan. You keep the house and the terms change. A different path entirely, and not one I'm involved in.

There's also reinstating the loan, selling normally if there's equity, and doing nothing and letting the case run. Every one of these lands differently on your credit, your taxes, and what you can buy next.

I'm not going to tell you which one is yours. That decision usually turns on legal and tax questions I'm not licensed to answer, and it's your house and your money. What I'll do is lay out what each one actually does so you're choosing between real things instead of rumors.

Where the Timing Comes From

The clock on all of this is federal, not Florida.

Under 12 CFR 1024.41(f)(1), a servicer generally can't make the first notice or filing to start a foreclosure until the loan is more than 120 days delinquent. Before that, 12 CFR 1024.39 requires live contact by day 36 and a written notice by day 45 describing the options that may be available to you.

And a short sale is one of the loss mitigation options that can go into an application under 1024.41. If a complete application lands inside the pre-foreclosure review period, or after a filing but more than 37 days before a foreclosure sale, the servicer generally can't move for a foreclosure judgment or run the sale while it's under review. There are conditions and exceptions, and the word "complete" is carrying most of the weight in that sentence.

I wrote the long version of the timing question here: How Many Mortgage Payments Can You Miss Before Foreclosure in Florida?

And if a case has already been filed against you and there's a document recorded against your property, that's a lis pendens, and it's explained here: What Is a Lis Pendens in Florida?

Working With Me

I'm based in Jacksonville and licensed in Florida, and I work Northeast Florida. Jacksonville, St. Augustine, Ponte Vedra Beach, Nocatee, Orange Park, Fleming Island, Fernandina Beach, Yulee and Palm Coast are all in range.

If you're outside Florida, I can't represent you. I can put you with someone in the SFR® network who can, and I'm happy to do that whether or not there's anything in it for me. Short sale questions from anywhere are fine. The referral is the honest answer to a state I'm not licensed in.

What working on one of these with me looks like: we go through where you actually stand, what the lender is likely to want, what the file needs, and what each of your options costs you. Then you decide. I don't need you to have it figured out before you call, and I'd rather tell you in the first conversation that your answer is a modification or a bankruptcy attorney than in the fifth.

I'd rather take the right file carefully than chase volume.

If You Want to Talk

No pressure, no judgment, and no charge for the conversation.

A HUD-approved housing counselor is free and worth a call too, whether or not you ever speak to me.

Jim Armstrong, REALTOR® · Momentum Realty (904) 671-4161 · JimArmstrong904@gmail.com

Jim Armstrong is a licensed real estate agent (REALTOR®) with Momentum Realty. This page is general information, not legal, tax, or financial advice, and it isn't a substitute for reading your own loan documents. Rules change and every file is different. Consult a licensed attorney, a CPA, or a HUD-approved housing counselor about your situation.

IMPORTANT NOTICE

Jim Armstrong / Momentum Realty is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan.