Just make sure that the lender approved her at 100% LTV (Loan to Value). Getting an approval for a maximum amount does not automatically mean they don’t want the borrower to have some equity. That is, equity amounting to an appraised value of X percent greater then the loan amount.
Can’t tell you about the credit reporting issues regarding a short sale. Assuming the loan was, and remains current, then I would think Saxon would report it as “Paid”. I can’t believe that negotiating with a lender for a short sale, on a loan that is current, could in any way create a negative credit reporting issue.
Go to: http://www.givemebackmycredit.com Denise will know. A good insurance policy would be to buy her book while you are there.
However, a forgiven debt, or any portion thereof, is taxable income. Although I heard something about Washington wanting to change that wonderful little IRS provision.