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Reply #8: Foreclosure, loss of credit as to a future mortgage and everything else and personal liability for [View All]

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No Elephants Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jun-20-12 09:12 AM
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8. Foreclosure, loss of credit as to a future mortgage and everything else and personal liability for
the deficit, including having an involuntary bankrupcy filed against you.

Once upon a time long ago in most states, the only remedy a mortgage lender had was to foreclose on the home (aka nonrecourse mortgage).

Then came the ability to ruin your credit for years and years.

Then came the ability to sue you for the difference between whatever the lender got from your home after foreclosure and the full amount of the mortgage, including late fees, interest on interest, etc. And if you can't pay, the judgment is good for 20 years.

So, good luck finding a landlord who will rent to you because you most definitely will not find another mortgage lender, except maybe a wealthy family member who loves you A LOT.

Also, you will owe extra taxes on forgiveness of indebtedness. Congress did provide temporary relief from the tax bit, but that expired and has not been renewed. And, supposedly, the mortgage relief Congress passed was designed to fail. Whether or not that is so, very few people who were underwater were able to get any benefit from that bill.

that's why people don't just walk away. I have a family member going through this.

He just had a mini-stroke, which I very much suspect was because of the stress his underwater mortgage, combined with this loser economy, has caused him.

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