Can I be held liable for any deficiency if I let my home get foreclosed

Be VERY CAREFUL and don't assume that the people who are "just walking away" are getting away with not having to pay. The process can take quite a while to fully play out, but if you stop paying, eventually the mortgage holder will foreclose. If it doesn't get enough to pay off the debt (and from the situation you describe, it won't), the noteholder has the right to sue you for a deficiency judgment, and once it gets that, can attempt to levy on other assets of yours or garnish your wages.

It is possible the debt might be dischargeable in bankruptcy, or there might be other options, such as a short sale.

You need a consumer law attorney who is knowledgable in mortgage forclosure and bankruptcy law to obtain the best result. The National Association of Consumer Advocates (NACA) is a non-profit consumer advocacy organization. NACA maintains a web site at www.naca.net where it lists geographically consumer law attorneys all over the US. If you don't already have an attorney, please look there for someone in your area who can help you.

Margery is correct. Many people assume if they just walk away, they will be off the hook. That is not true, unless the lender choses not to pursue someone. If the lender foreclosures and auctions off the property, you will be responsible for any deficiency. What that means is the lender is entitled to have its loan paid off, including all other amounts listed in the foreclousre lawsuit, such as interest, attorneys fees, costs, etc. and any other liens recorded against the property. If it is not paid, the lender can file a lawsuit against you for the difference. Similarly, if there is a surplus after paying everything off, you are entittled to that. However, based on the current state of the real estate market and even your own valuation, that it not likely.

In a non-judicial state, the first lien holder can not come after you with any deficiencies, but the second mortgage (lien holder) can. Best thing is you might want to look in to doing a short sale. In a short sale, the
lien holder accepts a short pay off according to the Foreclosure Prevention Act of 2008, they have to participate in a short pay off to prevent foreclosure. When doing a short sale, it is best to interview realtors who are experienced in this area, otherwise you might end up in a refusal of the bank to a short sale or worse is you might end up in foreclosure. Right now, you need to call the loss mitigation department of the lien holder on that second mortgage and tell them that you would like to look in to doing a work out loan,
(loan mosification). Maybe they can reduce your payments to something very affordable for you. Do not wait as time is not your friend. I am not an attorney and this is no legal advise but we have done over 100 units in short sales, loan modifications and helped people stop foreclosure on thier property. See S,2636,The Foreclosure Prevention Act of 2008