Mortgage insurance benefits and protects the lender/investor on the note. It does not protect the borrowers from any credit hit , judgement or liability. If you are in a hardship and this home is a primary residence, there are options available that may help you stay in your home depending on the situation. I am happy to share with you those options in case there is something you have not tried.
Otherwise, the best solution is a short sale. Short sales are less complicated these days and some lenders will assist with funds for the borrower for moving expenses. Also, as an owner occupant, the " Debt forgiveness act" is in effect until year end which will forgive owner occupants the deficient payoff amount from being taxed as income.
If you have an investment property, short sale is still a better option than foreclosure. There was a rumor or perception that foreclosure gives you a clean slate from further tax liabilty but , the debt or judgement can contnue the collection past the foreclosure and tax liability can cost you more money.
HOWEVER, tax advice is recommended with a certified/qualified tax consultant in any real estate transaction.
Feel free to contact me for a private consultation.
Adriana Orlando, Realtor
Regency Real Estate, Tracy