My Financial Healthcheck

Former homeowners may still be on the hook if there’s a difference between what they owed on their mortgage and what the bank could sell it for auction.  These deficiency judgments are time bombs that can go off years after borrowers lose their homes.  Whether banks can and will pursue deficiency judgments depends on many factors, including what state the borrower lives in and whether there’s a second mortgage or other liens.  One way to avoid the judgment if your circumstances qualify is to declare bankruptcy.  New York Attorney General Andrew Cuomo unveiled a major legal action against senior Bank of America executives earlier this month over its controversial purchase of Merrill Lynch.  Industry observers have issued dire warnings for more than a year, suggesting that lenders are on a collision course with potentially billions of dollars worth of commercial real estate losses.   Banks have already recognized about $50 billion in losses, some $1.4 trillion in commercial real estate debt is expected to come due over the next three years.  If rents Americans pay on condos, apartments or homes that are about the same size, and share similar neighborhoods as your home, that in the end determine what your house is worth.   Recent reports have shown that steady or even falling rents have pulled down housing prices, to the point where in many markets it costs about the same amount to own as to lease. It is likely that that prices will fall another 5% or so nationwide, the drop could also be greater since rents are still falling.