2nd Loan Used For Purchase -Inland Empire, CA - Will It Follow Us?

[lagwag0n]

So as far as I can tell we are free and clear should we need to foreclose on the house. We are currently trying to work with our lenders, with little success so far. At any rate after talking to a lawyer he says we may in fact be liable for the second loan depending on how the second lender peruses it and depending on our loan terms. Can someone shed some light on this please? Keep in mind we never refinanced adn all of the funds borrowed were used for the house.

For my story please see: Going to stop making payments. What next?

[The Professor]

Find a lawyer familiar with California Real Estate Law (in particular purchase money secured loans on California residential real property under California Code of Civil Procedure Section 580b). That lawyer should also be familiary with debt collection practices. Have the lawyer review your purchase and loan documentation (not just tell you that "it ... depending on our loan terms").

Bottom line is that without a determination relative to the recourse (or non-recourse) nature of your loans, you really can't make an informed decision. Key factors that make them "non-recourse" under CCP Section 580b is if they were purchase money loans for your owner occupied residence. That will likely be the case if (1) they were created at the time you bought the home, and (2) the entire loan proceeds were used to buy the home.

Daniel

[lagwag0n]

Both are true in that we purchased the home to live in and are still living in the home ourselves and the everything went into the home purchase. I guess we will have to talk to a CA lawyer as the one we spoke to I believe was a friend of my dads and not practicing in CA.