Question about house

[caseyandjenny]

Sorry if this has been asked, but if you decide to surrender your house and walk away, are you still on the hook for the difference when the bank sells it? or does it go away like the difference on a car repo would. thanks

[Priceless ProSe]

I dont know about specifics for Bankruptcy but in general it depends on the state you live in for foreclosure. Here in california it is primarily non-judicial foreclosure in which the lender has to "eat" the balance (no defficiency judgement), the only time they can go after you is if its a non-purchase money loan (in cali) meaning you refinanced and took money out (kinda).

The best news for you is that no matter what happens you wont get a 1099 in the mail. Before this year if the bank did "eat" the balance they would send you a 1099 for the difference and you would report it as income at the end of the year, no more my friend. For example, if you owed 250k and the bank sold it for 150k your income just increased 100k that year and your paying a buttload of taxes, but like I said no more, for now (set to sundown at the end of 09 so make sure your houses are forclosed and auctioned off before then just in case) Oh im not a lawyer BTW, dont follow my advice.

Oh the rule above only applies to principle residence BTW

[Help!]

If you surrender the house in BK you are not held responsible for the deficiency in the absence of fraud.

[lrprn]

Sorry if this has been asked, but if you decide to surrender your house and walk away, are you still on the hook for the difference when the bank sells it? or does it go away like the difference on a car repo would. thanks

Situation 1 - you do NOT file bankruptcy and then walk away from the house. If you do this, then you DO owe whatever has not been paid on the house when you walk away.

Situation 2 - you DO file bankruptcy first and do NOT sign a reaffirmation agreement. If you walk away from the house after discharge, then you do DO NOT owe the remainder on the loan.

Situation 3 - you DO file bankruptcy first and you DO sign a reaffirmation agreement that is also signed by your lender and filed with the court. If you walk away later, then you DO owe the remainder on the loan.

Hope this clarifies things for you.

[Priceless ProSe]

Situation 1 - you do NOT file bankruptcy and then walk away from the house. If you do this, then you DO owe whatever has not been paid on the house when you walk away.

Situation 2 - you DO file bankruptcy first and do NOT sign a reaffirmation agreement. If you walk away from the house after discharge, then you do DO NOT owe the remainder on the loan.

Situation 3 - you DO file bankruptcy first and you DO sign a reaffirmation agreement that is also signed by your lender and filed with the court. If you walk away later, then you DO owe the remainder on the loan.

Hope this clarifies things for you.

I think what he is asking about is deficiency judgement, and this really does vary by state. If hes in California (or any other state that does not utilize judicial forclosre in purchase money loans) and its an original purchase money loan I cannot see how it could possibly make a difference when he walks away because these states dont allow judgement without judicial foreclosure. Please correct me if im wrong, as I very well may be.