what are the consequences of foreclosure

smuppane · Joined: 30 Aug 2009 Posts: 1 1.33 Dollars($)

I bought this house for 575000 in CA and I put 10% down. Had two loans originally for 80% and 10% of the cost. Then I combined these two loans into one and opened a additional home equity line of credit and took out 65000 from it. Now if I foreclose on this home which is my primary home would banks come after me as the current market value is only 330000. Will they issue a 1099 if I foreclose? What are the tax consequences?

sunnyca2009 · Joined: 04 Aug 2009 Posts: 1737 36.13 Dollars($)

check this out

http://www.mortgagefit.com/foreclosure.html

smithsussane · Posted: Sun Aug 30, 2009 8:25 pm Post subject:

Hi smuppane!

Welcome to forums!

Once the lender forecloses the property, he would sell it off to recover the dues. As the real estate market is going through a crisis now, there are chances that the property would be sold at a lower price. Thus, you would be liable to pay off the deficient amount once the sale is over.
However, as California is a anti-deficiency state, the lender will not sue you for the deficient amount. As far as the taxes are concerned, it would be forgiven depending upon the California Mortgage Debt Relief Act.

Feel free to ask if you've further queries.

Sussane

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