Walking away from a Mortgage

[45Frank]

What is the name of your state (only U.S. law)?
NC
I am just wondering I hear all the garbage about folks just walking away from Mortgages and wonder how they get away with it. If you owe the bank say 75,000.00 and walk away isn't there a lean put against you or anything you buy or own like another property for the rest of your life? Otherwise isn't it just stealing.

 

[Antigone*]

What is the name of your state (only U.S. law)?
NC
I am just wondering I hear all the garbage about folks just walking away from Mortgages and wonder how they get away with it. If you owe the bank say 75,000.00 and walk away isn't there a lean put against you or anything you buy or own like another property for the rest of your life? Otherwise isn't it just stealing.

Frank, do you remember the saying about squeezing blood our of a turnip?

Often times the deficit is charged off and taken as a loss for the bank. There may also be tax consequences for those who have walked away from their homes and had their debt forgiven.

 

[HomeGuru]

What is the name of your state (only U.S. law)?
NC
I am just wondering I hear all the garbage about folks just walking away from Mortgages and wonder how they get away with it. If you owe the bank say 75,000.00 and walk away isn't there a lean put against you or anything you buy or own like another property for the rest of your life? Otherwise isn't it just stealing.

**A: there are millions of pages on this subject on the internet.

 

[LdiJ]

Frank, do you remember the saying about squeezing blood our of a turnip?

Often times the deficit is charged off and taken as a loss for the bank. There may also be tax consequences for those who have walked away from their homes and had their debt forgiven.

Not anymore if it was their primary residence. Forgiven debt for a primary residence is excludable from tax since the Mortgage Debt Relief Act of 2007.

 

[nextwife]

Not anymore if it was their primary residence. Forgiven debt for a primary residence is excludable from tax since the Mortgage Debt Relief Act of 2007.

Isn't the borrower who walks and is foreclosed given tax preferential treatment over the more responsible borrower who agrees to offer a Deed in Lieu of Foreclosure? I don't quite understand the logic of requiring the bank to go through the time and expense of a foreclosure for the borrower to get the Act's tax protection.

What about the borrower who walks and the bank charges off the loan but refuses to foreclose it (there are a number of reasons this can happen)? If there is never a foreclosure, the municipality can still hold the owner responsible for code compliance. Does the borrower get the same protection if no foreclosure takes place?

 

[justalayman]

What is the name of your state (only U.S. law)?
NC
I am just wondering I hear all the garbage about folks just walking away from Mortgages and wonder how they get away with it. If you owe the bank say 75,000.00 and walk away isn't there a lean put against you or anything you buy or own like another property for the rest of your life? Otherwise isn't it just stealing.

actually, in some states, the lender can sue the debtor for the deficiency after the home is resold. In other states, that is not allowed. Your state happens to be a non-recourse state which means the lender has no such recourse. In my state, they lender can (and has in many cases) sue the debtor for the deficiency.

Your results may vary based on the state involved so be sure to check with a lawyer for specific information.