Expert: Dick Dennis - 2/2/2010

Question
This is related to the question you answered. (http://en.allexperts.com/q/Buying-Selling-Home-1476/2009/4/consequences-mortgage...) The house in question is in Missouri. Could not sell it for 2 years. Have been renting it. But had to incur a loss of around $3000 every year. Dont want to hold the house anymore. If the mortgage is defaulted:
1. Will the bank come after the other assets of the owner like bank savings, car or the other house?
2. Does 'Bankruptcy' need to be declared? Or just walking out of the house is enough? 3.

Answer
Missouri is a RECOURSE state, John. That means if the debt is recourse, you are personally liable for the debt. So a recourse home mortgage means that if your house is foreclosed or sold short, lender can hold you personally liable for any loss and will try to recover it through a deficiency judgment. A deficiency judgment is the difference between what you owe on your mortgage and the amount your lender will get from selling your house.

Even though the Federal government frowns on banks to foreclose in this economy, it doesn't mean that your lender will not seek a deficiency from you. Therefore, I strongly suggest you consult with a real estate attorney and/or a tax attorney to make sure whatever path you take to solve your problem is the correct one. Also, you might need to consult with a bankruptcy attorney to address that possibility. One thing for sure, it will erase ALL your debt, including the house. So you may want to talk to a bankruptcy attorney first. I do wish you well.

Dick Dennis
dixiedee13@aol.com