What happens when a homeowner's mortgage is under water and the home is foreclosed?

Will the bank be able to go after the former home owner for more money if the foreclosure doesn't satisfy the loan?What happens when a homeowner's mortgage is under water and the home is foreclosed?
Technically the bank can seek a deficiency judgment against a borrow for the unpaid amount. This unpaid amount can be quite high as the legal fees, etc., get added into the total.





Usually a bank reserves this action against cases that look fishy or where a lot of money was recent taken out and now the loan is in default.





The can (and often will) issue you a 1099 where the amount that was forgiven now counts as income for you. In one of the stimulus packages, the federal government decided to forego income taxes on this type of 'income' but not a single state followed suit. This means in some states, that you could owe up to 10% of this amount in state income taxes.





good luck!





ps - after they get a deficiency judgment, they can apply to garnish you wages, your tax returns, your home (if you still have one) or any other asset that has value (except, I believe, your retirement account).What happens when a homeowner's mortgage is under water and the home is foreclosed?
The short answer is yes, but they rarely do. It's like trying to squeeze water out of a turnip. The home is the only property you secured for the mortgage, and you have turned that over. Technically they can take you to court and get a judgement for the balance, but that usually costs them more money than they will recover and it's difficult to collect anyway. However, if they write the balance off on their taxes (which they most likely will), you could be held liable by the IRS for the taxes on that money- because it is basically a gift to you. Be prepared to lose your tax return for years to come- but it doesn't always happen.
Yes they can, i believe this is called a deficiency judgement. They usually do not however, especially if it is obvious the homeowner has no means to repay the difference.Otherwise they will just waste time and money on legal fees. For someone who has the ability to repay the debt, the lender may pursue a judgement in court against them...It really depends on the situation...
A foreclosure means that whatever the person had up for collateral they take, whether it fulfills the loan amount of not. That is how the deal works.
In a judicial foreclosure state, and most of them are, yes, the lender can go after you for the balance you owe after auction.