Posted on: 15th Dec, 2009 12:51 pm
We own a rental home in the State of Michigan and we have lost our tenant and can not afford the mortgage and up keep on the home. The mortgage is for 142K and the market value is around 50-60k. If we go into forclosure (mortgage company is HSBC) and the home is not the primary residence (as the Mortgage Indebtness Relief Act of 2007 addresses) what are we liable for? Will we be liable for federal taxes AND the mortgage deficiency? Has HSBC been going after forclosed rental homes for deficiency judgements? Does HSBC negoitate the deficiency? Does anyone have experience with HSBC or a situation similiar to this? Thank you.
Hi,
You will be liable for the deficiency from the foreclosure. The lender can sue you for the deficiency if they feel they can recover the money from you. They can obtain deficiency judgment against you. Since this is not your primary residence, you cannot claim protection under anti-deficiency laws. If the deficiency is forgiven by the lender, you will be required to pay tax on the cancelled debt as it will be considered as your income. It depends on your lender as well as your individual situation whether they will go after you for the deficiency or forgiven the balance.
You will be liable for the deficiency from the foreclosure. The lender can sue you for the deficiency if they feel they can recover the money from you. They can obtain deficiency judgment against you. Since this is not your primary residence, you cannot claim protection under anti-deficiency laws. If the deficiency is forgiven by the lender, you will be required to pay tax on the cancelled debt as it will be considered as your income. It depends on your lender as well as your individual situation whether they will go after you for the deficiency or forgiven the balance.
We are dealing with HSBC now, did they go after you for the deficiency?
Welcome Guest,
It will depend upon your situation whether or not the lender will go after you for the deficient balance. If your property has been foreclosed upon by the lender, then they will come after you for the deficient balance resulting from the sale of the property.
It will depend upon your situation whether or not the lender will go after you for the deficient balance. If your property has been foreclosed upon by the lender, then they will come after you for the deficient balance resulting from the sale of the property.