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We went through Chapter 7 in 2006 .. opted to sign papers to keep our home. Lost our home to foreclosure in 2009.

Received a 1099a that shows box 5 as yes, we are responsible for debt. Box 2 shows 93,000.00, Box 4 shows FMV as 108,000.00

Our credit reports are showing the mortgage as discharged in bankruptcy back in 2006 although we signed the papers to reaffirm.

It was an FHA loan and it appears Well Fargo received all their money from FHA. Now HUD has the home.

Can - will HUD come after us for anything?
Will it eventually be changed on our credit report from being discharged in bankruptcy to being foreclosure?

Thanks in advance.

Niicss · Posted: Mon Feb 15, 2010 3:20 am Post subject:

As far as I can understand your situation, you had reaffirmed your mortgage dues in order to save the property. But your property went into foreclosure due to non-payment of the dues. Did your lender forgive the deficient balance resulting from the sale of the property? If yes, then you are responsible for paying taxes on that forgiven debt. If the lender did not forgive the deficient balance, then you will have to pay it off to him. As far as I know, if your property has gone through foreclosure, then it would be mentioned in your credit report.

Posted: Mon Feb 15, 2010 1:33 pm Post subject:

We don't know that there is a deficient balance. Best we can understand is the FHA insurance paid off Wells Fargo in full. The trustee deed went from us to Wells Fargo. Now it shows the warranty deed has been passed from Wells Fargo over to Secretary of Housing and Urban Development.

The only thing we have received is the 1099-a.

jerry · Posted: Wed Feb 17, 2010 2:16 am Post subject:

Hi cook,

As you reaffirmed the mortgage while in bankruptcy Chapter 7, you are liable to pay it off in full. It seems that the mortgage was not discharged through bankruptcy because of the reaffirmation agreement you signed with the lender. Check your bankruptcy papers. If the debt was discharged through Chapter 7, you are not personally liable to pay it off.

But if the debt was not discharged through bankruptcy and the property sold for less than the outstanding loan balance at the foreclosure auction, you will have to repay the difference. But the fair market value of the property ($108,000.00) shown in box 4 is more than the principal balance owed on the loan ($93,000.00) shown in box 2. Hence, there does not seem to be any deficiency from the foreclosure sale of the house and you will not have any taxable income from discharge of mortgage debt.

Thanks,

Jerry

Posted: Wed Feb 17, 2010 11:53 am Post subject:

Thanks much Jerry.

I just learned that HUD has our home listed on the market for 61,000.00 and allowing offers. Again, I can only guess FHA insurance paid Wells Fargo in full. I'm just not understanding why they are listing it for so much less and if Uncle Sam will be asking us for something in the future. One thing is for sure, we're going to live it.

Thanks again for the replies.

jenkin7 · Posted: Wed Mar 03, 2010 12:56 am Post subject:

Hi Guest,

Posted: Fri Mar 05, 2010 12:27 pm Post subject:

Thanks but now I'm even more confused. I live in Texas. The law reads -

Lenders may obtain deficiency judgments, but they are limited to the difference between the fair market value of the property at the time of sale and the balance of the loan in default.

Thanks again.

savior70 · Posted: Thu Mar 11, 2010 2:11 am Post subject:

To Guest,

It is true that you will be held responsible for any deficiency arising out of the sale of the home. You will be liable to pay off the deficiency to the extent of the difference between the outstanding balance on the loan and the fair market value (FMV) of the property. Thus, no matter what the property actually sells for, your lender can sue you for the difference between the FMV of the home at the time of foreclosure and the mortgage balance.

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