There was supposed to be an Amnesty Period a couple years ago, 2008 I believe, and I remember it was supposed to last two years. I think it was Federally mandated to help homeowners. This would be something for you to research.
Also, I understand that some States have different laws and protections, and it will vary from State to State.
California evidently has the best protections for the Homeowner, but it may not be 100%
And if you LIVE in another State and the house was in California.... Flip a coin.
I also remember something about if the Homeowner was "Destitue"; meaning that they didn't have any obvious assets that the Bank could go after....
It's possible that this could hang over people's heads for years; particularly if they try to buy another house too soon.
We absolutely have not heard the end of this. This could be the thing that will be the next WAVE, after forclosures.
The bottom line; have a serious meeting and invite your Attorney and your Tax man.
They may or may not file for a deficiency judgement.
Cross your fingers and hope that the chaos in the market allows it to fall through the cracks.
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