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Merlo
Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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MY HUSBAND OF 50 YEARS LEFT ME AND OUR HOME WILL BE IN FORCLOSURE.

Customer Question

MY HUSBAND OF 50 YEARS LEFT ME AND OUR HOME WILL BE IN FORCLOSURE. WILL THEY FORGIVE ME OF THE DEBT IF IT DOESNT SELL FOR ENOUGH TO COVE THE MORTGAGES.
CAN THEY COME AFTER MY BUSINESS?
Submitted: 7 years ago.
Category: Tax
Expert:  Merlo replied 7 years ago.
Hello paulie,

Under normal circumstances, when you go through a foreclosure, the amount of the loan which ends up being cancelled or forgiven ends up being reported as taxable income to you. However, due to the recent mortgage lending crisis, Congress has passed legislation which allows homeowners who go through a foreclosure on their primary residence, to excude this forgiven debt from their taxable income. This exclusion applies to foreclosures on your primary residence which occur through 2011.

As far as the loan balance owed to the bank, you will have to check the details of your loan agreement to see if you have a recourse or non-recourse loan. With a non-recourse loan, that means that the bank has no recourse to collect the money, other than foreclosing on the property and keeping the proceeds from the sale. If you have a recourse loan, that means that the bank could file suit in court to try and obtain a judgment against you for any amount of the mortgage that was not covered by the sale. If they would win their lawsuit, then they could place liens or levies on your other assets. If your husband's name is XXXXX XXXXX mortgage as well as your name, then they could go after the assets of both parties.

You should be able to read through the terms of your mortgage agreement to see if you have a recourse or non-recourse loan. If you are unable to determine this on your own, you should simply call the lender and ask them to verify what type of loan you have with them on your mortgage.

If this was helpful please press the Accept button. Positive feedback is also appreciated.

Thank you paulie.

Merlo and 2 other Tax Specialists are ready to help you
Customer: replied 7 years ago.
i was unable to get the info from the citi mortgage because they told me they had no such term (recours or non recourse) now what?
Expert:  Merlo replied 7 years ago.
Hello again paulie,

Perhaps Citi Mortgage uses different terms other than recourse or non-recourse in the language of their agreements. But somewhere in that agreement it will still indicate the same principle, and that is whether or not the lender can use only your home as collateral to guarantee payment on the loan, or if they can also use any other assets that you have as collateral.

That is basically what you need to look for in that agreement, or what you need to ask the representative at Citi Mortgage.