Going through foreclosure here in California....

[lifeagent]

...Have a first mortgage and equity line second.? What are my tax implications going through this foreclosure? Also am I going to have to pay back the bank for the loss they will incur when they sell the property?

[Cheeky Realtor]

Actually, cancellation of debt income is not taxable on a non-recourse loan (a loan in which the lender's only recourse is to repossess the property upon default).

Also, if the lender does not get enough money at auction for the property they can seek a deficiency judgment against the borrower for the difference.

[877YouKeep]

lenders are not going after deficiencies currently as a servicer. They are not going to put out $ 400 to attorneys to start the filing. Although for asset loans we are seeing more and more deficiencies. We help homeowners keep their homes so it is a non issue. Short sales guys have to deal with the post foreclosure issues. I have done deed in lieu's though and they are 1099ing

[877YouKeep]

I do not see many in fact haven't seen a recourse loan in residential real estate. Non recourse loans are typically on commercial real estate. These loans are risky for lenders and are only issued on larger equity deals.