Can I default on my home mortgage and walk away without lender going after my other assets?
The Answer : If you own a house worth $100,000 but the mortgage is $110,000 - and you walk away - the lender has the option of foreclosing and coming after you for the difference. It's up to the lender, but if you just walk away without any communication, they will most likely come after you. If the bank takes the house into inventory (bank owned) it will try to sell it for the best price, fast. That could mean a sales price of $80,000 (just an example). At that point, the bank has the option to forgive you the difference of $30,000 and not go after you or your other assets. However, the IRS will treat that $30,000 forgiven loan as taxable income to you - and yes, the IRS will go after you for it. I would suggest you talk to your lender about extending the term of your loan to add any missed payments back into the principal or as additional payments at the tail end of your mortgage life - so you can try to keep the house. If you absolutely can not make the payment anymore, talk to your lender about a short sale - giving you the chance to sell it quick and pay off what you can, so it does not become bank inventory. With a short sale, ask your lender to forgive the difference after the sale. A short sale on your credit rating is not as devastating as a foreclosure. However, the IRS will still look at the loan balance forgiven as a taxable item. For more information, call the Home Ownership Preservation Foundation, a non profit group dedicated to helping people in trouble keep their houses. 888-995-4673 Good luck and best wishes.
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