Not at all. The recent federal action only indicates that you will no longer have to claim such shortfalls as federally taxable income. It says NOTHING about lender forgiveness of the indebtness.
Frankly, since the 'act' was passed, I've seen an upsurge in lenders pursuing legal actions for deficiency judgments.Does the Mortgage Foregiveness Debt Act say the foregiven amount is completely wiped clean?
The act says you won't be taxed.
It is 100% up to the lender to decide to sue you or not.
Banks are losing billions on ';short sales'; and defaults. They HAVE to start trying to collect the money they have lost.
If you have a decent income and few other debts, the odds of being sued go up a lot.
With the 2005 Bankrupty Reform Act, the bank has a really good shot at collecting at least a portion of their losses back.
Good luck to you.
that's correct.
Either you're not asking the question incorrectly, or you are confused of the process.
The mortgage forgiveness does not come from the act passed by the government, the forgiveness comes from the lender. They are the ones to decide if they will come after you for the balance due.
In your example above you state that the lender is forgiving the debt but then you say the new law is stating you are no longer held liable. That's not the law. The law is simply that if the lender decides to forgive the debt you no longer need to pay taxes on it as income. Before this law was passed, you would owe taxes on the $100,000 that the lender forgave. For a debt that size, it could be somewhere around 30% ($30,000).
If the lender does not forgive the debt, then you still owe it to them. The government does not get involved.
As you can see, the ball is really in the lender's court on this to decide how they want to proceed.
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