I am a resident of Georgia and currently reside in a house I purchased in May, 2005. I am losing my house in foreclosure on March 6th. I have two mortgages through Citimortgage. The first mortgage is a Freddie Mac mortgage. If the house is foreclosed on will Citimortgage or their attorneys come after me for a deficiency judgment or attorneys fees and court costs on the first and/or second mortgages? If not will I have to report the deficiency and pay taxes at the end of the year on either mortgage?
2 Answers from Attorneys
Maybe. You are asking for a guess as to what the lender will do, and as far as taxes, no one here knows the necessary facts about your financial and tax situation.
There is no way to tell you for sure what the lender will do. But many lenders these days do, at least some of the time, sue for deficiencies. If they do you can expect your wages and bank accounts to be taken later via garnishment. A bankruptcy is one way you may be able to prevent that. Call me if you are in or near Atlanta for the details at 404-768-3509.
As for tax consequences, a federal law that applies for some foreclosures through this year may allow you to, if you properly file it on taxes, to exclude the deficiency from your income on taxes. You will get a 1099. If you don't take the right steps, you could owe a lot of tax.