Question: We have been approved for a Deed-in-Lieu of Foreclosure. My case is very straight forward (i.e. one mortgage, no liens, etc). The Estoppel Affidavit that we received mentions the cancellation of debt. Does the bank’s acceptance of Deed-In-Lieu of Foreclosure waive their right to a deficiency judgment?
Response: No, you avoid a deficiency judgment by opting for the Deed-in-Lieu of Foreclosure. However, when any portion of the debt is cancelled, the amount that is cancelled is then treated as part of your annual income, on which you would have to pay taxes at the end of the year. However, if the debt is cancelled on your primary residence, then you don’t have to pay taxes on that amount. Essentially, if the property is not an investment property, then you should have no monetary consequences.
In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.
The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information.
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