If my lender forgives part of the balance on my existing loan, will it affect my credit or my taxes?

As with any loan forgiveness action, a short refinance (short payoff) may be reflected as a negative feature which can impact a borrower’s credit score.

For questions regarding the cancellation of debt and possible tax consequence you should consult your tax advisors.


HUD Policy Determination

All policy information contained in this knowledge base article is based upon the referenced HUD policy document. Any lending or insuring decisions should adhere to the specific information contained in that underlying policy document.


Topic Number: KA-02196