Great advice Stella.  I recommend the same.  It's so sad that people think its over because the bank has possession.  In fact, some bankruptcy lawyers don't even understand the new tax breaks.  Just had one lawyer tell a client to foreclose and file bankruptcy afterwards.  I told her to definately get a second opinion before taking the house of the market and foreclosing.

The nice thnig about my states laws are that if the loan they are going to walk away from are purchase money loans there is no recourse.  Take care!

RJH

The nice thnig about my states laws are that if the loan they are going to walk away from are purchase money loans there is no recourse.  Take care!

RJH

The nice thnig about my states laws are that if the loan they are going to walk away from are purchase money loans there is no recourse.  Take care!

RJH

Thanks for commenting Robert.

Stella,

You are right. "Deficiency" judgements are common ...and there can be IRS issues also.

Trey- Thanks for commenting.

Their alternative is filing for bankruptcy...their BIGGER problem is finding alternative housing once they leave their foreclosed home.....rental homes will have application/credit criteria as well as pet restrictions.

Wallace - You are right about bigger problems in finding a rental.  It is harder to rent than it is to buy in these type of cases.

I haven't done a survey, but I think many states don't allow the primary mortgage holder to go after the deficiency (my understanding is that this is the situation in California).  I understand from my loan officer that, in general, the second loan holder cannot do so either, but he says it varies based on the exact nature of the second.  But I would not render such advice to a client because if you are wrong and the client relies upon the advice, thinks could get difficult.

Margaret - That is why I tell people to seek legal advice instead of "assuming".  In Virginia, we have had judgments filed at the lawfirm I work at and as a Bankruptcy Assistant, I have had to file bankruptcy for clients that have had judgments filed against them that they could not afford to have their bank account garnished or their pay garnished.  Thanks for commenting.

Deficiency judgements are becoming more and more common and as mortgage lenders are facing more and more financial trouble I suspect they will continue to increase as a way to mitigate the lenders' losses further.

Steve - There was a time that this did not happen for someone that lost their home but I am seeing them more and more already.