If a homeowner forecloses and the bank/lender has a loss after they sell the home, is the homeowner responsible for the loss, or is this forgiven under new laws and then tax free, or does it depend on lender?
As we understand the current process, at foreclosure a bid is made for your home by the lender or some third party. The deficiency is established at that point. That deficiency is still owed to the bank, but if it is not paid, it is not considered taxable income. Before that tax rule changed, the bank could have determined that the deficiency was not collectible and told the IRS it was taxable income for you.
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As we understand the current process, at foreclosure a bid is made for your home by the lender or some third party. The deficiency is established at that point. That deficiency is still owed to the bank, but if it is not paid, it is not considered taxable income. Before that tax rule changed, the bank could have determined that the deficiency was not collectible and told the 