Question:
house is sold for less than what is owed, spouse is not on loan but on the deed. what is his/her financial obligation?
Answer:
I doubt very seriously that the other spouse is not on the mortgage. It is highly unlikely that a lender would accept a security interest from only one spouse, unless the second spouse wasn't on deed at the time of the original loan. Even if true, the lender won't release the security unless arrangements are made to pay the loan in full or have some of the debt forgiven. If the lender forgives some of the debt, the lender will issue a 1099 and it will be treated as income.
No obligation unless the spouse wishes to keep the house. As long as the spouse is not on the loan then the foreclosure won't have any impact to credit rating
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