after foreclosure, can your mortgage...

[THNMKIN]

...company make you pay what they lose in a foreclosure sale? I have a first and second mortgage (to avoid PMI) and I am wondering if, after foreclosure, if we are going to be liable finacially for the banks loss, or the difference between our loan balance and what they get in the foreclosure sale? I know that our credit score will be affected, but I am wondering if that is the only repercussion? I also know the laws are different in states I am in Nevada anyone that knows the nevada foreclosure law specifically would be great. I am also wondering once we move out, assuming we do so before notice to evict what role will we, as the homeowners, need to play in the foreclosure process? I have heard that you must fill out a 1099 form for taxes? saying the difference between the amount owed and what the bank gets is roughly 30,000 what would that mean we pay at tax time?

[Homer J. Simpson]

Yes. It is called a deficiency judgement and the lenders will seek it out if they think that they can eventually collect an amount that exceeds the cost of getting the deficiency judgement.

For taxes, if the lender pursues a deficiency judgement, there are no consequences in current year. However, if the lender just wants to cut its loses and move on and not deal with you anymore, then there are tax consequences. The internal revenue code classifies forgiven debt as income and you will owe income tax on the amount forgiven.