After the bank takes possession of the property, the mortgage loan disappears and the lender deals with items owed by the prior owner, such as homeowner association fees and tax liens.
With most foreclosures, the lender issues a form 1099 to the borrower, for the forgiven debt. The borrower may owe taxes on this amount. There is current legislation that would eliminate the tax on mortgage relief. Foreclosed property owners are well advised to consult a tax professional about the status of this issue. |
