Posted on: 04th Oct, 2009 07:02 pm
i heard from know-it-all that i will be subjected to tax or i need to pay my lender for whatever is the difference between my mortgage loan amount and the actual sell value.
please advise if i will still owe money to my lender (1st mortgage) after foreclosure and to my second mortgage lender.
thank you.
please advise if i will still owe money to my lender (1st mortgage) after foreclosure and to my second mortgage lender.
thank you.
afaik, both lenders have a secured interest in the property. If the total of the debts is say 200K and you sell the asset for 175K, then you will still have a debt of 25K. the First mortgage holder gets paid out first from the proceeds of the sale, the second mortgage holder gets the rest.
the debt will remain even if you have sold the property, until it is repaid.
the debt will remain even if you have sold the property, until it is repaid.
Hi Guest,
When you signed on the promissory note you promised to pay the loan in full. Now, if your house goes into foreclosure and is sold for less than what you owe, you will be responsible for the deficiency. Your lender can either forgive the deficiency amount or can come after you to recover it.
If the amount is forgiven, you will owe tax to the IRS as they consider it as your income. However, under the Mortgage Forgiveness Debt Relief Act, you can claim certain exemptions from the taxes on the forgiven debt amount.
When you signed on the promissory note you promised to pay the loan in full. Now, if your house goes into foreclosure and is sold for less than what you owe, you will be responsible for the deficiency. Your lender can either forgive the deficiency amount or can come after you to recover it.
If the amount is forgiven, you will owe tax to the IRS as they consider it as your income. However, under the Mortgage Forgiveness Debt Relief Act, you can claim certain exemptions from the taxes on the forgiven debt amount.