Hi, the real answer is dependant on both your state and lender. For example, in California, we are a trust deed state and therefore, the lenders are not able to get judgements against us should they take a loss on the foreclosure. Their only recourse, should they use it, is to report the loss to the IRS by doing a 1099, in which you have to pay taxes on the money lost.
It is dependant on your lender as to what they do based on state laws and the options available to them, such as if they were able to recover the loss by their insurance.
Regards
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