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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: Earlie who wrote (59259)1/18/2001 1:50:10 PM
From: Ilaine  Read Replies (1) of 436258
 
Getting out of a mortgage isn't as simple as "walking away" unless you can get the lender to take the deed in lieu of foreclosure, or in some cases transfer the deed to the lender and get the lender to forgive the debt for hardship reasons. Even after foreclosure, you're liable for the deficiency, and that's more than the mortgage because of the foreclosure costs, plus the house doesn't usually sell for fair market value at a foreclosure sale. If the lender forgives the debt, that's treated by the IRS as income to the borrower.

In the real world, the lender may not push this because then they have to write down the loan and admit to the FDIC that the loan is no good, which means that their asset balance is smaller so they have to loan less money. Which is illegal, but that's the games people play when they are in a tight fix.
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