Question by darwinsti: Can my mortgage company take my tax refund if i am in foreclosure?
We are in “accellerated” foreclosure. We haven’t received the notice of sale, but the company refuses to accept any payment from us unless it is the full arrears. Yet, they took our federal tax refund and i was told that legally since we are in foreclosure, they have to return the refund. Is that right?
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I’ve never heard of that. How did they get it? Are you in Bankruptcy?
There are tax implications to foreclosure though, because in the end they forgive your debt and that becomes a taxable event. The difference between the debt and what the mortgage company realizes from the foreclosure / REO sale of the property. I think Congress is trying to change this right now for lower income groups, but I’m not sure if they have.