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> In the US you don't end up with a debt to the bank if the value is less than the loan Could you explain this a bit more. I think you are saying that in the

> In the US you don't end up with a debt to the bank if the value is less than the loan Could you explain this a bit more. I think you are saying that in the US when you sell your house for less than the value of the loan, the banks takes the loss instead of you, which is not how I thought it worked. Does this have something to do with mortgage insurance?

ojbyrne 12y ago
I think he means if you get foreclosed, the bank has no recourse beyond just taking your house. If you sell your house, then obviously you're responsible for the difference.
- olentangy 12y ago
  Sounds like a short sale. http://en.wikipedia.org/wiki/Short_sale_(real_estate) http://en.wikipedia.org/wiki/Short_sale_(real_estate)
- seanflyon 12y ago
  That seems odd. Why would anyone sell their house for less than their mortgage when they can just walk away and not owe anything?
  - dragonwriter 12y ago
    > Why would anyone sell their house for less than their mortgage when they can just walk away and not owe anything? Credit and taxes -- a short sale is, though damaging, less so to ones creditworthiness than a foreclosure, further, the entire amount of the unpaid principal (in either the short-sale or the foreclosure/surrender case, but foreclosure sales generally return less than a short sale with positive owner involvement would) is taxable as income.
dragonwriter 12y ago
> I think you are saying that in the US when you sell your house for less than the value of the loan, the banks takes the loss instead of you This is generally the case with a voluntary sale at less than the loan value, but those are generally only possible with the consent of the lender (who has a claim on the property which must be extinguished for you to sell it.) It is also sometimes the case in the event that the lender forecloses on the property for non-payment, and the foreclosure sale produces less than the amount owed on the loan -- but this differs between different states.

ojbyrne 12y ago

I think he means if you get foreclosed, the bank has no recourse beyond just taking your house. If you sell your house, then obviously you're responsible for the difference.

olentangy 12y ago
Sounds like a short sale. http://en.wikipedia.org/wiki/Short_sale_(real_estate) http://en.wikipedia.org/wiki/Short_sale_(real_estate)
seanflyon 12y ago
That seems odd. Why would anyone sell their house for less than their mortgage when they can just walk away and not owe anything?
- dragonwriter 12y ago
  > Why would anyone sell their house for less than their mortgage when they can just walk away and not owe anything? Credit and taxes -- a short sale is, though damaging, less so to ones creditworthiness than a foreclosure, further, the entire amount of the unpaid principal (in either the short-sale or the foreclosure/surrender case, but foreclosure sales generally return less than a short sale with positive owner involvement would) is taxable as income.

dragonwriter 12y ago

> I think you are saying that in the US when you sell your house for less than the value of the loan, the banks takes the loss instead of you This is generally the case with a voluntary sale at less than the loan value, but those are generally only possible with the consent of the lender (who has a claim on the property which must be extinguished for you to sell it.) It is also sometimes the case in the event that the lender forecloses on the property for non-payment, and the foreclosure sale produces less than the amount owed on the loan -- but this differs between different states.