Foreclosure consequences

**Brain** · 09-29-2009, 08:29 PM

Hello,

I have googled about foreclosure and its consequences, here's what I have understood so far, please let me know if some statements are not necessarily true!:

-Bank will repossess your house, and nothing else, unless some properties were attached (such as cars) during the time of negotiation.

-Your credit score rating will go down dramatically, you will not be approve for future loans, unless you have shown improvements paying off your debts on time for the next few years from the time of foreclosure, there may be lenders available for your situation, such as fannie mae and freddie mac.

-I have googled this over and over again, there may be a TAX BILL PENALTY if you foreclose your house? They said this is some of the money that the bank did not have the chance to collect after a successful sale of your foreclosure house? Therefore, IRS claim that as your income and added to your tax? Is this true? Please help! and also if there are other things I failed to mention and needs to know, please let me know!

**Greg** · 09-30-2009, 02:27 PM

if the property is your primary address then there will be no tax penalty. There used to be but it was rescinded.

http://www.irs.gov/newsroom/article/...174034,00.html

**Brain** · 09-30-2009, 03:09 PM

Greg, thank you for your great response.

Yes, this is my "brother's" primary address, and it was his first townhouse or house.

I read the link you gave me, I am sorry but I do not quite understand it.

But can you confirm that there is no tax penalty?

And, also, are there any other consequences of giving up your home to foreclosure that involves "Money"?

**Moore** · 10-12-2009, 04:00 AM

i know for sure that your credit score will go down for sure.
And you'll be able to take the next loan only some years after the foreclosure.I have acquintances who had the same prolem.