Hi I'm a REALTOR & Certified Mortgage Planning Specialist in San Diego. Thank you for this valuable info.
Question 1:
I read somewhere that you may still have tax consequenses for the deficiency amount even if foreclosure was non-recourse(purchase money & lender chose NON judicial process), because although lender understands you are protected from being sued/judgement actions, it does not prevent them from taking a tax deduction, which from what the article mentioned is required by law(as I understood). Being that tax consequences based on lender taking a deduction & suing you for deficiency are two different things, this leads me to believe that it does not matter wether you have Deficiency protection from from lender going after you personally, you still may face the equivalent in taxes due to lender having the right to claim a tax deduction. Please correct me?
I have researched the IRS rulings and publications. I am comfortable giving my client an opinion letter saying they are not subject to loan forgiveness taxation after a foreclosure or deed in lieu. A short sale is very different. Since the property does not go back to the lender - I am truly surprised to talk to realtors who think they can advise their clients that are protected from tax liablity for loan forgiveness.
Those are arguments for California license Real Estate attorneys.
If you send me an email I will try to locate some of my research for you