After Foreclosure Can Your Mortgage Company Make You Pay What They Lose In A Foreclosure SalePosted on April 28, 2011.  I have a first and second mortgage (to Avoid PMI) and I am wondering if, after foreclosure, if we are going to Be The Banks linkable finacially for loss, or the Difference Between Our loan balance and What They Get in the foreclosure sale? O I Know That Will Be Affected credit score, goal I am wondering if That Is The Only repercussions? I know aussi The Laws are in different states I am in Nevada anyone That Knows The nevada foreclosure law specifically Would be great. I am wondering aussi oz We Move out, do so Before Assuming weekends instructions to evict What Role Will We, As The Homeowners, need to play In The foreclosure process? I Have Heard That you must fill out a 1099 form for taxes? Saying the Difference Between the Amount Owed and What the bank gets IS Roughly 30.000 What Would That Mean We pay at tax time? CommentsBertha Kaelker says... Yes, the mortgage company can go after you for difference between the amount of sale at foreclosure and the amount you owe them.This is called a Deficiency Judgment and Nevada does allow for these judgments.Some banks will do this, some won't.It's totally up to them.
The tax implications come from another process that the bank could choose to do.They can choose to forgive the debt you owe to them.When they do this there is no Deficiency Judgment against you.The bank will issue a 1099 form to you and the IRS.This form basically states that you received X number of dollars as income from the bank.This "income" is the amount of money you owed them but they never chose to collect.The IRS treats this as income because the bank, in effect, gave you the money by forgiving your loan.You will then owe taxes on this income.Depending on your tax bracket you could owe anywhere from $6600 to $10,500 to the IRS for a $30,000 forgiveness.
Just as a note, it's best to try and work with the bank before they file a foreclosure with the courts.You will save them a lot of hassle if you choose to do a deed in lieu or a short sale.Once it goes into foreclosure court then you are getting yourself in a really bad place.
This site has the basic information on foreclosure laws for Nevada - http://stopforeclosure.com/Nevada_Forecl…
Good Luck! Posted on April 29, 2011 Leave a Comment | 
