What are the implications of a foreclosure?

Question:

I've just read an article that even after foreclosure the loan company can still sue you for non payment even if you lost the house. Plus the IRS can tax you on the difference if the loan happens to be a "recourse" loan. I've never heard of a recourse loan. And is it true about going after you for non payment

Answer:
Yes, the lender can and probably will sue to cover any losses. And the IRS can tax you for the amount of the loan that is not collected.

Recourse loan definition:

A debt instrument wherein the lender can legally require repayment of a loan from personal funds if the collateral is not sufficient to repay the note. As opposed to a NON-RECOURSE LOAN where the lender can only obtain compensation from the collateral.

Check your mortgage note. It will tell you if it is recourse or non-recourse. Most are recourse, though.

You signed a legal note promising to repay a certain amount. Yes, the lender can sell the property for as much as they can get & sue you for the rest.

yes, not only do you owe the balance due on the loan, you also owe any late charges, fees, etc. associated with the foreclosure process. if the bank sells your home and the sales price doesn't cover the outstanding balance, then a deficiency lien is issued against you/your credit report.

What are the implications of a foreclosure?

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