Foreclosure in Mililani>Question Details

Honugirl, Other/Just Looking in Mililani, HI

Can an owner be responsible for any balance concerning their property that has been foreclosed the non-judicial way?

Asked by Honugirl, Mililani, HI Fri Aug 13, 2010

Do they have to claim it as income on their taxes?

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The best answer is possibly. Some states allow a lender to pursue a Deficiency Judgment, the lender sues for the difference between what is owed and the amount they receive in the sale. It can also depend on whether the loan being foreclosed was used for the initial purchase of it it was a refinance different rules may apply. The same goes for the way the IRS will treat the deficiency. if debt is forgiven it may be treated as income.

Check your mortgage documents, there should be a section that deals with Recourse. it should give you an idea of what the lender can pursue in your state. If you have been foreclosed on or are in the process check the documents to see if the lender is entitled to a deficiency judgment or are they willing to waive it. if the foreclosure hasn't taken place yet negotiate with them.

I am not an attorney or an accountant. MOST IMPORTANT get legal and tax advise from the appropriate professionals.
0 votes Thank Flag Link Fri Aug 13, 2010
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