So as you can see, the homeowner has few choices to "stop his bleeding" as it is known in the industry. This is the hidden foreclosure market that is just beginning to become obvious. Many homeowners with second homes or investment properties are making the choice to walk away and take their chance with credit repair later. However, the most objectionable consequence is the potential for a deficiency judgment by the lender for the deficit that wasn’t paid on the mortgage. The lender has the option to pursue a deficiency judgment or issue and IRS Form 1099 which gives the homeowner "phantom income" in the amount of the mortgage deficiency, which is a far better option that carrying a deficiency judgment on his credit report. Take these consequences into consideration if you have to make the judgment of whether to stay or leave your home behind.

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