Jun
16
Do banks take legal action if unable to pay back home loans after forclosure?
By
Banks filed forclosure on my property, as i have 2 loans.Do banks take legal action to recover their money after surrender of property?
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2 Comments
June 19th, 2010 at 4:02 pm
They can.
Often the first loan is non-recourse, so they are stuck taking the property. The 2nd loan is usually recourse, so they can try to get you to pay the rest.
For tax purposes, the non-recourse loan is the amount you sold the house back to the bank for. The recourse loan overage is cancelled debt income. See IRS publication 4681.
June 23rd, 2010 at 12:07 am
They do and should. You owed them the money. Plus the IRS will tax you.
Here is an article from the Washington Post that explaines what happens when “you give the house back”