Scott gave you a good answer but I am not sure for a indivual that placed a mortgage. I would think it would be tracked like any other type of business expense if you had a business. However, mortgage companys do not track and file expenses via there tax filing. There are a number of things that can happen with a mortgage company depending on if there is a investor, pmi company, fha loan ,va loan or some other misc other options. The servicers usually end up filing claims for reimbursement and if there is a loss write off the balance as a loss. Most likley report the losses on their tax filing.
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