Recourse Foreclosure
What are the implications of a foreclosure?
I’ve just read an article that even after foreclosure the loan company can still sue you for non payment even if you lost the house. Plus the IRS can tax you on the difference if the loan happens to be a “recourse” loan. I’ve never heard of a recourse loan. And is it true about going after you for non payment
Yes, the lender can and probably will sue to cover any losses. And the IRS can tax you for the amount of the loan that is not collected.
Recourse loan definition:
A debt instrument wherein the lender can legally require repayment of a loan from personal funds if the collateral is not sufficient to repay the note. As opposed to a NON-RECOURSE LOAN where the lender can only obtain compensation from the collateral.
Check your mortgage note. It will tell you if it is recourse or non-recourse. Most are recourse, though.
Tax on Short Sale, Loan Modification and Foreclosure – Recourse vs Non-Recourse Mortgages
