If you are a victim of foreclosure you might receive form 1099 from the Internal Revenue Service. In a recently commented case the homeowner lost his home to foreclosure. His mortgage company, Wells Fargo, bought the home at auction on the court house steps. Wells paid one dollar for the home. The former owner received a tax bill for the payoff, plus fees, minus one dollar.
My advice is to study your paperwork and challenge the tax bill. If a former homeowner has declared bankruptcy and is insolvent there is no tax bill in most cases. Many people do not declare bankruptcy and simply move out of the home. If family circumstances changed drastically, such as illness or job loss, a huge tax bill can often force people into bankruptcy. We note that it has always been our opinion that the government and financial markets knew of risk in the mortgage market and lobbied for changes to bankruptcy laws (2005) before current problems surfaced.
The New York Times has a great article about foreclosure and tax liability. Examples show how it is beneficial to track what happens to your former home. See the article here