Legal Question in Real Estate Law in Illinois

In 2004 I purchased a home with a first time homebuyers loan. Unfortunately a little over a year later there were problems with the condition of the house that was going to cost me more than my loan to fix. Anyhow it ended up in forclosure in 2007. Every year since then my income taxes have gone straight to the government. My question is, exactly what is the money being put toward? I don't understand if I am paying them back the cost of my loan what it is repaying. Also how can I find out how much I still have left to pay back? I have put this off far to long and need to find out anything I can to better understand the situation and see what I owe and what I can do about it. Any help would be greatly appreciated. Thank you for your time.


Asked on 1/15/14, 9:36 am

1 Answer from Attorneys
Stephen Messutta

If I understand your situation correctly, and it is somewhat confusing, if you were foreclosed in 2007 and the property was sold, then you could be paying the bank back the "deficiency" being the difference between what you owed on the loan and what the house sold for (assuming it sold for less than what you owed), which is called a deficiency judgment, plus interest, costs of suit, etc. Since 2009 many foreclosures have resulted in NO deficiency judgments and the amounts have been written off by many lenders AND the federal government has given most foreclosed borrowers a pass on the write off so it is NOT considered taxable forgiveness of debt income. All the information you seek should be contained in the foreclosure judgment papers and any supplemental proceedings. If you don't have them you should take all your former loan papers and foreclosure lawsuit papers to an attorney. If you are unable to pay your debts currently, you may be able to file for bankruptcy protection.

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Answered on 1/15/14, 10:53 am


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