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Will this increase the likelihood of a deficiency judgement?

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  • Will this increase the likelihood of a deficiency judgement?

    I have a rental home that I can no longer afford to keep as it has negative cash flow and equity. I have a 1st and 2nd mortgage. I am trying to work out a loan modification, but the bank wants to see my tax returns. I am a limited share holder in a LLC (family business) that pays out disbursements. This makes my income look substantial on my tax returns. I have no control over the disbursements and from what I understand, the LLC is protected from a deficiency judgment. My question is if by showing the bank my tax return will it make them more likely to pursue me personally for the deficiency if the loan mod fails and it goes to foreclosure?
    I am debating whether or not I should just let it go to foreclosure or let the bank see my tax return and risk having them pursue me down the road for the deficiency.

  • #2
    Re: Will this increase the likelihood of a deficiency judgement?

    I wish to inform you that you are liable for the mortgage of your home. In this if the bank desires to check your tax return then that is for the purpose of ascertaining that whether you can pay the given loan or not. In this the liability of yours is the amount of mortgage. For this mortgage the court can proceed towards your assets for satisfaction. However, LLC assets cannot be attached for this. Instead if you go for a loan modification then you can change the terms of the contract. In this your income from LLC will be taken into consideration before modifying your loan. You have to pay the loan and it is not necessary from rental income of your house. The liability to pay loan amount arises from all sources of income including income from disbursement. However, if the loan is a non recourse loan then the bank may go against the property mortgaged but not against your other assets as you are not personally liable.

    AFF

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