What are the ramifications of foreclosing in California?

[BudgetCutsinOC]

Can I get sued on my first???
wages garnished.......?

Give me the worst case scenario,,,,,thanks!



F. Chase!

[caldwellb02]

Nope. Nope. we are a non-recourse state. Only chance of that is if they use a judicial proceeding, and from what I hear that is rare.

There may be something about being responsible for taxes on the loans that I still don't understand...

[Moe Bedard]

Refinances, second mortgages, and "cash out" transactions will turn a non-recourse California purchase money loan into resource loans. Purchase loans for your primary residence are most likely non-recourse loans in non-recourse states.

Many lenders are selling the seconds before foreclosure to collections agencies. Thus, these collectors are going after people.

■No deficiency judgment is permitted after a non-judicial foreclosure or for a foreclosure on a purchase money loan. If the foreclosure is judicial, a deficiency judgment is allowed if the foreclosure was not a purchase money loan. California’s one-action rule requires the lender to foreclosure and sues for a deficiency at the same time. If the lender elects to foreclose only, it can’t elect to sue for a deficiency later on.

■Starting June 15, 2009 lenders must give homeowners an additional 90 days to modify their loans. There are a number of conditions that must be met. (1) The loan must have been recorded between January 1, 2003 and January 1, 2008. (2) It must be a first mortgage or deed of trust. (3) A notice of default must be filed. (4) The lender must not be exempt. You can find out whether your lender is exempt here. (5) It must be the homeowners principal residence.

The law states you must be living in the property at the time the loan becomes delinquent. A lender to be exempt, basically, must have had an existing loan modification program in place that meets certain requirements. You can read the entire bill here. (The law expires on January 1, 2011 unless extended.)

[caldwellb02]

Moe - thanks. I was just making the assumption that it was a purchase money loan.

Are you saying that if the the first forecloses, then the second can go after us in CA if it was an 80/20 purchase loan? That wasn't my understanding. Sorry, but some of this is still confusing.

[SwillerAlesbane]

If you purchased your home with an 80/20 plan (80% 1st/ 20% 2nd), then the second in NON-RECOURSE.

I not sure if the 2nd or HELOC's are recourse, as they were tied into the value of the home. Both become unsecured credit, so I'm assuming if they pushed it you could chapter 7.