I know we all thought this subject was dead but I wanted to share this anyhow. It's from House Calls in the local paper a column written by Edith Lank.
My house might be going into foreclosure next month if I can't get a loan modification. The bank is going to auction it off. I'm not sure how that works. Am I still responsible for the difference owed?
Yes,, forclosed properties are sold at public auction. If the sale price doesn't cover the debt, the lender may or may not go after you seeking a deficiency judgement. Unfortunately, there's no way I can predict the result. But if they don't, here's something else to worry about. The IRS considers that if you borrow money and are excused from paying it back, you've had a taxable income. When the housing crisis got bad , Congress stepped in, so that forgiven debt on a residential mortgage was NOT taxed. This provision expired at the end of 2013, and Congress has not yet acted on a resolution to extend it through 2016.
I'm sure a non-profit agency around you may have useful advice. You can search for a local agency at the website of the National Foundation for Credit Counseling, nfcc.org. Look for a HUDD-approved counselor, even if yours is not an FHA mortgage. - Edith Lank
Me again. Certainly having a foreclosure is not the worst thing in the world and you can survive it. BUT at least know what's what if it happens. This is why I suggested getting advice and talking to your lender.
Peace out. (whatever that means)
Rancher