What is my liability when doing a Foreclosure?
A. Your house is auctioned off by the lender, which typically increases the difference between what you owe the bank and what the bank receives from the sale of your property. . This may result in a higher tax liability. Further, the lender may file a Deficiency Judgment for the difference. The purpose of a short sale, if successful, is to minimize or eliminate your tax liability, eliminate a deficiency judgment, and ensure the foreclosure does not appear on your credit report.
