I know for a fact that if you didn’t refinance the original loan then it is non-recourse. There cannot be a deficiency judgement against you and nor can there be any tax liabilities. Of course as always double-check with a CPA as sdr said.
If you refinanced however, there are huge problems including possible deficiency judgements and/or IRS tax liability. I asked another question about this whether it only applies to cash-out or not.
I would imagine definciency judgements are much better because you know how the IRS is about money owed to them 🙂 From what I’ve read many lenders will discharge the loss and issue 1099 resulting in huge tax liability for the borrower.
I think there was a bill in congress to change this legislation but not sure what is the state of that.