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In 2008 we decided to sell our home in MI and move to TN. We refinanced the MI home based on a 245K appraisal for total 194K owed. We bought less than we hoped for as a foothold place in TN and have been straddling 2 mortgages for the last 24mo. We never expected to be unable to sell. We are still current in our payments. Now our MI house is "worth less" than we owe, & we are at wits end. We are preparing to talk deed in lieu with the bank. Which they said we could only do if we were current in our payments.

If they take it back & sell for what they can, will we be liable for the difference or for taxes? If we found a buyer to buy short (if the bank agreed to the sale) would we be liable for the difference or for taxes?" Would we ever be able to buy another farm? Please help. Crying or Very sad

Sylvia

adonis · Posted: Wed Feb 24, 2010 8:25 pm Post subject:

Welcome Inamess,

If the lender accepts your request for a deed in lieu of foreclosure, then he would forgive the deficient amount resulting from the property. Though this would be considered as a taxable income by the IRS, you won't have to pay taxes depending upon the Mortgage Debt Relief Act. If the property goes for a short sale, then you would be liable for paying the deficient amount resulting from the sale of the property. After a short sale, you need to wait for 2-3 years and then apply for a mortgage to buy a new property.

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