Debt Forgiveness and Subsequent Judgment After Foreclosure

[mdres]

My question involves a mortgage in the state of: Virginia

My husband purchased a home in VA prior to our marriage, and defaulted on it while we were married in 2010. The bank/trust foreclosed (Deutsche Bank). At foreclosure the bank bought the home back and issued a 1099-C for the difference of what he owed and the amount the bank purchased the home back for (approx. $67k). My husband was (and is) insolvent, therefore, no tax was due on the debt forgiveness. A year later the bank finally sold the property for approx. $100k less than they purchased it back for. Very frustrating, since the bank would have received a lot more money had they accepted the short sale offer we worked so hard to get, instead of letting the property decline for a year. My question is whether the bank will go after my husband for either: 1. The additional $100k decline in value during the time the bank owned it and then sold it at a loss; or 2. The $67k for which the bank already issued a 1099-C. Do we need to "watch and wait" until all statutes of limitations expire? In addition, he has now moved to Maryland. Does that change anything? Thanks in advance for any guidance you can provide.

[flyingron]

You are OK. You're doubly golden. First off, the fact they bought the property at the public sale and sold it later for less just means they made a bad bid at the public sale. They can't recover against you for that. If it had sold at the public sale for less than what they were owed, then they could have pursued you. That didn't happen. Further, once they officially forgive the loan (1099-C) they've waived their rights to further action against you. I'm not even sure of the propriety of claiming any amounts on the 1099-C in this case.

[mdres]

Thanks so much for your response. Just to clarify, the mortgage debt was higher than the price they purchased the house for at the public sale. So the 67k was the difference between the debt and the bid price, for which a 1099-C was issued. I had heard that some banks may still issue a judgment even after issuing a 1099, they would just file an amended 1099 if they chose to do so. Of course, issuing the 1099 gives them the ability to write-off the debt, so I would think they would only reverse that process if they had a good liklihood of collecting. Any thoughts on this specific issue? Thanks again.