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What happens if I default on two mortgages?
What if I walk away from my home, I owe $173,000. I make enough to pay monthly on the loan. But I want to walk away from my home because I am underwater already. Will I have any financial responsibilities there after, or am I free and clear?
5 Answers
- R PLv 77 years ago
Wow! You can afford the payments but you want to walk away scot-free just because you are underwater?
If you do that, YOU are part of the problem with our economy. YOU signed a legally binding contract, took the bank's money to purchase a home and now you want to know if it's OK to walk away from the house????????
The bank will come after you for their money. They will issue you a 1099 for the balance you owe; then you get to pay income tax on that money as well as the social security taxes owed on it.
- Anonymous7 years ago
In CA, if that is your primary residence (owner occupied) the first lien lender cannot pursue a deficiency judgment against you, for the difference between what you owe (plus their foreclosure costs) and what the home is worth or eventually is sold for. So you are lucky in that respect; many other states do not offer this sort of "protection". However, the foreclosure will show on your credit report and depress your score for quite some time, making it impossible to get other loans (home loans, car loans, etc.) in the near future.
Also, if you have junior liens (second or third mortgages, home equity line of credit, etc.) and the first lien holder forecloses, those subordinate lien holders CAN sue you for what is owed them, even in CA.
- ?Lv 77 years ago
They can sue you for the money in some states. In most the unpaid portion becomes income to you and you pay taxes on it. Either way your credit gets destroyed.
Walking away just because you are underwater is stupid. Unless you NEED to move, there is no point.
- Anonymous7 years ago
bank will either foreclose or you agree to a short sale....bank loses a little...then they take a tax deduction off any loss....then again, if you are underwater, you can probably refinance...think about it...the house is only worth $140,000.oo....that means it will only sell for 140K...cost about twenny grand to forclose ....another eighty-five hundred for a realtor commission....if you don't include any interest they made off the loan in the first place, the difference is five thousand bucks...yeah, I think they will make a deal...so will you
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