CalHFA Condo Walk w/ Immediate Move Story

[Exit Strategy]

All I'm saying is that there are *no* guarantees in life. We don't have a crystal ball to gaze into and predict what the bank will do when you go into foreclosure. Maybe, as you speculate, they will run your numbers, determine that you are, in fact, "loaded", and opt to go the judicial route in your case. In this case, astute asset planning would have been valuable to you because had you done so, the bank's financial check on you would have turned up nothing (since you've hidden your assets) and you could have held on to your possessions with a little planning and foresight.

Or maybe, as 99.99% of other foreclosures on residential properties go, they will go the non-judicial route, and be out of luck if a deficiency results after the foreclosure. If so, then asset planning is still no skin off your nose.

There are also other situations in life - such as becoming involved in civil litigation etc - where smart, proactive asset protection measures will come in very helpful. My post was intended as merely a suggestion to you as I am, personally, a rabid advocate of asset protection measures. I did not, in any way, intend to give you the impression that the bank has any right to any of your other assets, in the event of a non-judicial foreclosure on purchase money loans of primary residences in California.

Thanks, Screwed.

A quick internet search turns up this info: If you hide assets knowing that you are going to default, then the bank's claim is viable and the court will make you reveal the assets and turn them over. In other words, it may be too late to protect assets.

I am not a lawyer. Not an expert. Not even a very smart person. But that's what I've gleaned so far.

The issue of asset protection is a good one. I'm glad you raised it.

[TomEason]

Thanks, as always, Tom.

What I was thinking was that, if the sheer volume of FCs rises to a certain point, they may find a way to make it cost effective. After all, other states are doing it every day per their state law.

So, do I need "asset protection" in my strategic default if I have assets other than the house and/or cash? I'm thinking your answer will be "No, you don't need it in a non-judicial FC."

Exit Strategy
Yes, FCs in many other states must be judicial per those states' statutes - that's the only reason they do them judicially on small residential loans. Some states allow both, and where that option is available to them, lenders always choose the non-judicial route. I think you need to find something else in your life to worry about, LOL!

[Exit Strategy]

Exit Strategy
I think you need to find something else in your life to worry about, LOL!

LOL!

I'm just getting started! My first missed mortgage payment hasn't even happened yet!

[Screwed11]

Thanks, Screwed.

A quick internet search turns up this info: If you hide assets knowing that you are going to default, then the bank's claim is viable and the court will make you reveal the assets and turn them over. In other words, it may be too late to protect assets.

I am not a lawyer. Not an expert. Not even a very smart person. But that's what I've gleaned so far.

The issue of asset protection is a good one. I'm glad you raised it.

Yes, it is called fraudulent conveyance. This is why it is important to research and implement asset protection *before* you get into any sort of issues. I learned this when a rich relative of mine was involved in an automobile accident (she was at fault) and THEN attempted to hide her assets when she was sued in a civil suit for hundreds of thousands of dollars. The court voided her attempts to protect her assets and she had to fork over the judgment. This is why I rabidly advocate asset protection *before* something turns up in your life.

Now, w.r.t foreclosure, you can still go ahead and protect your assets legally. Why? Because your loans are purchase money and the lender would have no recourse anyway (if they pursued non-judicial foreclosure) to any of your possessions. So, how can hiding your assets, (to which the affected party has NO legal rights to), be considered fraudulent conveyance?

I am a born worrier myself, so I understand your concerns. But try not to work yourself up into a frenzy over it. Believe me, I know how hard it is not to... but worrying isn't going to make a teeny tiny bit of difference to the outcome unless it spurs you on to do something productive and proactive about it. Be assured, in this situation, you're 99.99% safe!

[TomEason]

Screwed11
Thanks for your post. I have a minor correction to one of your statements lest a reader be misinformed. That statement is "your loans are purchase money and the lender would have no recourse anyway (if they pursued non-judicial foreclosure) to any of your possessions." The correction is that, in CA, Exit Strategy is protected by Cal CCP Section 508(b) regardless of the kind of foreclosure the lender uses, trustee sale or judicial. In Exit's case, a lender would be absolutely stupid to use a judicial foreclosure, but they're not legally barred from so doing. They are, however, legally barred from seeking a deficiency judgment pursuant to that foreclosure. That's where the stupidity comes in, LOL.

[Screwed11]

Screwed11
Thanks for your post. I have a minor correction to one of your statements lest a reader be misinformed. That statement is "your loans are purchase money and the lender would have no recourse anyway (if they pursued non-judicial foreclosure) to any of your possessions." The correction is that, in CA, Exit Strategy is protected by Cal CCP Section 508(b) regardless of the kind of foreclosure the lender uses, trustee sale or judicial. In Exit's case, a lender would be absolutely stupid to use a judicial foreclosure, but they're not legally barred from so doing. They are, however, legally barred from seeking a deficiency judgment pursuant to that foreclosure. That's where the stupidity comes in, LOL.

Ah... I stand corrected. Thanks for the heads-up, Tom :-)

[Exit Strategy]

Screwed11
Thanks for your post. I have a minor correction to one of your statements lest a reader be misinformed. That statement is "your loans are purchase money and the lender would have no recourse anyway (if they pursued non-judicial foreclosure) to any of your possessions." The correction is that, in CA, Exit Strategy is protected by Cal CCP Section 508(b) regardless of the kind of foreclosure the lender uses, trustee sale or judicial. In Exit's case, a lender would be absolutely stupid to use a judicial foreclosure, but they're not legally barred from so doing. They are, however, legally barred from seeking a deficiency judgment pursuant to that foreclosure. That's where the stupidity comes in, LOL.

Yes. That makes it clear for me, too.

Thanks.

[stuckinsandiego]

In the future let's take the above discussions to another thread. I want my story to be helpful to other CalHFA borrows in my similar situation so they can read what I am going through with the foreclosure. I don't want to them lead away from the off-topic posts.

Thanks! - stuckinsandiego

------------

Update: Received a letter dated 5/5 stating they were now sending our account to a trustee to start the foreclosure proceedings. It said we would be responsible for the fees incurred IF from this point forward we tried to get current and stop the foreclosure (which we will not be doing).

It also came with another letter asking us to pay the $100+ in late fees only. Sort of weird, but that can be ignored. Both letters were forwarded from the old address, nothing new has been sent here.

Still no phones calls from either lender. The CalHFA cease and desist is working great!

[Screwed11]

In the future let's take the above discussions to another thread. I want my story to be helpful to other CalHFA borrows in my similar situation so they can read what I am going through with the foreclosure. I don't want to them lead away from the off-topic posts.

Thanks! - stuckinsandiego

Apologies for the hijack, Stuck.

------------

Update: Received a letter dated 5/5 stating they were now sending our account to a trustee to start the foreclosure proceedings. It said we would be responsible for the fees incurred IF from this point forward we tried to get current and stop the foreclosure (which we will not be doing).

It also came with another letter asking us to pay the $100+ in late fees only. Sort of weird, but that can be ignored. Both letters were forwarded from the old address, nothing new has been sent here.

Still no phones calls from either lender. The CalHFA cease and desist is working great!

Glad it's finally all coming to a head for you. Good luck!

[5284CA]

Unless they pursue a judicial foreclosure. Right?

Let's say the banks have one of their smartguy computer wiz kids pull up your bank accounts (legally or illegally) and they see you have money. They could decide to move your file over to the judicial foreclosure desk, couldn't they?

I am not a lawyer...but here is how I understand the CA purchase money non-recourse law:

If it is a non-recourse loan then the bank/lender has no recourse other than collecting the property for which money was borrowed, meaning they cannot do anything but take the property back no matter what they find out about you or your financials.

I suppose I could be wrong, and if I am I would like someone to correct me so I am not misinforming people, but in my analysis thats how I read it...

[knownick]

I am not a lawyer...but here is how I understand the CA purchase money non-recourse law:

If it is a non-recourse loan then the bank/lender has no recourse other than collecting the property for which money was borrowed, meaning they cannot do anything but take the property back no matter what they find out about you or your financials.

I suppose I could be wrong, and if I am I would like someone to correct me so I am not misinforming people, but in my analysis thats how I read it...

You're exactly right.

Answering Exit_strategy's original question (at the risk of derailing this thread once again, but I think it's an important discussion that gets repeated over and over on this site), Yes, the bank "could" decide to judicially foreclose on you if they wanted. In the case of a purchase money loan though, they gain NO advantage from doing this. They still are not entitled to a deficiency, and have turned a simple, straightforward process into one that will likely take 2+ years to complete.

The reason lenders NEVER (Tom used this term above, and while I don't like using absolutes, it really is true in this case) use judicial foreclosure on small residential loans in California is the "right of redemption" period AFTER the expensive and drawn out court process that effectively renders the house useless and unsellable for 12+ months after the end of the legal proceedings. So not only do they spend more money on a messy process that doesn't guarantee results, their end game is a house that they have to hold on their books for at least a year and a defendant that they may or may not be able to collect a dime from even if they DO get a favorable judgment.

Who in their right mind would do this? I think people don't understand that this whole game is a largely automated process. There aren't people with Evil Intentions examining every case with a fine-toothed comb and determining whether or not they think the borrower is a good case for a judicial foreclosure. Evaluating that for every loan would be a colossal waste of time. I'd wager that it's not even a consideration in ANY case, and that the lenders and servicers have a simple policy of "homes are repossessed via trustee sale in California", period, end of story.

[stuckinsandiego]

UPDATE UPDATE UPDATE UPDATE UPDATE UPDATE UPDATE UPDATE
************************************************** *******
Received the NOD today via certified and regular mail. It was filed by a local attorney's office on behalf of CalHFA. Two identical letters, one sent to me, the other to my husband to our new address, not the condos.

Everything is running smoothly - let's get this thing auctioned off and out of our life!

[TomEason]

@knownick @5284CA
Thanks for your post. Not to beat a dead horse, but a non-recourse lender in CA cannot pursue a deficiency judgment even if they use a judicial foreclosure per Cal CCP Section 580(b), as I stated in post # 45. If any member has doubts about this, I might recommend he/she read the statute for him/herself.

[Screwed11]

UPDATE UPDATE UPDATE UPDATE UPDATE UPDATE UPDATE UPDATE
************************************************** *******
Received the NOD today via certified and regular mail. It was filed by a local attorney's office on behalf of CalHFA. Two identical letters, one sent to me, the other to my husband to our new address, not the condos.

Everything is running smoothly - let's get this thing auctioned off and out of our life!

Hey,

That was MIGHTY quick... March, 2011 to May, 2011...exactly 3 missed payments, eh? Cool... glad it's gathering steam for you.

Any word from the City?

Good luck...and congratulations!

[stuckinsandiego]

UPDATE - Advise needed PLEASE

Got a credit report alert today, figured it was the 90 day late, but it says this:

"BANK ADJUSTMENT / DEED IN LIEU / BANK LIQUIDATION"

Now we haven't spoken with CalHFA at all, so we don't have a loan mod, deed in lieu or anything like that outstanding. What does this mean?

Otherwise we haven't received anything since the Notice of Default (besides lots of letters from lawyers offering to "help," some even wrote us on facebook!). The city just sent a statement with the amount owed with late fees, but that was it.

[underwater_vallejo]

UPDATE - Advise needed PLEASE

Got a credit report alert today, figured it was the 90 day late, but it says this:

"BANK ADJUSTMENT / DEED IN LIEU / BANK LIQUIDATION"

Now we haven't spoken with CalHFA at all, so we don't have a loan mod, deed in lieu or anything like that outstanding. What does this mean?

Maybe your credit monitoring service picked up the NOD which was filed with the county and is public information?

[stuckinsandiego]

**Update

Small update with the city. They emailed "Good news, now you can eliminate your 2nd and 3rd with us!" They also called and spoke with my husband. They said this way they don't miss out on getting paid if we foreclose. "Don't worry, everything will be fine" she told him.

The paperwork is a typical financial hardship packet, but it looks like it is from them, not a government program. We never qualified for a hardship before, so I really do not see the point. Also, everything has been going so smoothly with the foreclosure, I don't want this to mess it up. The NOS should be filed next month and hopefully the place will be sold in September.

Technically they are the 4th and 5th loans behind CalHFA's main loan and two silents. Again if CalHFA sees they got money it could mess things up. So I am going to igore this for now.

Credit report wise, nothing has been posted since the "BANK ADJUSTMENT / DEED IN LIEU / BANK LIQUIDATION" in June. However we did get a ding for going over our new "$310" limit on the one card that lowered us. We were over by $10. Opps. Our BOA and Chase cards however have not dropped our limits at all.

We are still paying the HOA and I am hoping next month can be my last payment.

[Exit Strategy]

Stuck,

Thanks for this update!

Exit

[Screwed11]

**Update

Small update with the city. They emailed "Good news, now you can eliminate your 2nd and 3rd with us!" They also called and spoke with my husband. They said this way they don't miss out on getting paid if we foreclose. "Don't worry, everything will be fine" she told him.

The paperwork is a typical financial hardship packet, but it looks like it is from them, not a government program. We never qualified for a hardship before, so I really do not see the point. Also, everything has been going so smoothly with the foreclosure, I don't want this to mess it up. The NOS should be filed next month and hopefully the place will be sold in September.

Technically they are the 4th and 5th loans behind CalHFA's main loan and two silents. Again if CalHFA sees they got money it could mess things up. So I am going to igore this for now.

Hi,

Thank you for the update with the City. As you rightly point out, they are in 4th and 5th position and the odds of them being paid are minimal at best. To me, this sounds very suspicious. There's no way that they can "help" you eliminate the second and the third with CALHFA, while still being valid & enforceable, themselves. Maybe I'm missing something here but I just don't see how it can be done. I suspect that they are attempting to get your financials on file, so that they can come up with something else should they get wiped out at trustee sales. I'd just ignore their emails and phone calls.

BTW, is the letter directly from the City or from a loan servicer? I was led to understand that some Cities have hired debt collectors as "loan portfolio managers" and that these "loan portfolio managers" aka debt collectors are very persistent and high pressure in discharging their "loan servicing" obligations. And a bait like this is exactly what I'd expect from them.

Finally, I think you mentioned the City loans as not appearing on your credit report. Is that still the case? What about the silent second and third with CALHFA? Are they being reported to the credit bureaus? Any idea what your current credit score is?

Good luck, and please continue keeping us posted. I'm following your thread very closely. It's giving me a lot of emotional support to read your posts. God bless you!

[knownick]

I suspect that they are attempting to get your financials on file, so that they can come up with something else should they get wiped out at trustee sales.

Maybe it's just me but I don't see any such conspiracy. Having their financial information does NOTHING to change the law or their ability to collect on a nonrecourse loan. The borrower could have a billion dollars in the bank and it won't do them one bit of good. The banks know this. They have no desire to chase people down for financial information they can't do anything with.

Instead I suspect they are reading the writing on the wall and have figured out that the borrower is going to foreclose. They know there is no chance whatsoever of them recovering any of their money in a trustee sale, given the severely underwater nature of their notes.

With that in mind, they're trying to get you to submit a modification packet for one of the government's second lien modification programs, which gives the lender an incentive (on the order of $1-2k) to modify or forgive junior notes entirely. Seems like good business to me - a couple thousand dollars on a pair of small loans is much better than getting nothing at all. Given the reality of the situation (and the fact that they pretty much know you're going to foreclose), it would seem they have a strong incentive to "qualify" you for one of those programs.

I don't really see how it benefits the borrower, but I can certainly understand the lender's perspective.

[stuckinsandiego]

Screwed- The email letter was from the City program. I use the term "city" loosely, in my situation, it isn't the city of San Diego itself, but a non-profit organization helping people in the city of San Diego. The email came directly from someone working there.

I looked at the paperwork more closely and it is the "Community 2nd mortgage principal forgiveness program." Then I read the things you need to agree to and one of the clauses is that the home is "owner-occupied." Also you had to agree you did not intentionally stop making payments. So in the end we definitely do not qualify.

Regarding the credit report, only the main CalHFA loan is on there. The silent loans and the two loans with the city are not. CreditKarma says our score is in the mid-600's now. I am not going to do an official check until the foreclosure is done.

[Screwed11]

Maybe it's just me but I don't see any such conspiracy.

It's not you, knownick. I mis-read Stuck's update to read as the City claiming to help her eliminate the second and third with CALHFA, not with *themselves*. Hence my suspicion because I could not see how a junior lender could help a borrower eliminate a senior lender's lien!

As for the rest of your post - thank you again for the gentle but firm reminder that a wiped out lender on a purchase money loan is a wiped out junior lender on a purchase money loan. I really needed to hear / see that. Thank you, again.

Instead I suspect they are reading the writing on the wall and have figured out that the borrower is going to foreclose. They know there is no chance whatsoever of them recovering any of their money in a trustee sale, given the severely underwater nature of their notes.

With that in mind, they're trying to get you to submit a modification packet for one of the government's second lien modification programs, which gives the lender an incentive (on the order of $1-2k) to modify or forgive junior notes entirely. Seems like good business to me - a couple thousand dollars on a pair of small loans is much better than getting nothing at all. Given the reality of the situation (and the fact that they pretty much know you're going to foreclose), it would seem they have a strong incentive to "qualify" you for one of those programs.

I have never heard of this before. Where can I read more about this program?

I looked at the paperwork more closely and it is the "Community 2nd mortgage principal forgiveness program." Then I read the things you need to agree to and one of the clauses is that the home is "owner-occupied." Also you had to agree you did not intentionally stop making payments. So in the end we definitely do not qualify.

Regarding the credit report, only the main CalHFA loan is on there. The silent loans and the two loans with the city are not. CreditKarma says our score is in the mid-600's now. I am not going to do an official check until the foreclosure is done.

Thanks, Stuck! That's a silver lining that the junior loans won't show up on our credit report. If you don't mind sharing, then would you tell me what your scores were before you started? Thanks, again.

[stuckinsandiego]

Small Update-

Well we are still waiting for the NOS. It has been well over 90 days and I just want this done! I was hoping the place would be sold next month so I don't have to pay that month's HOA.

The "city" program emailed me a few more times about that packet I should fill out getting rid of our 2nd and 3rd, so I finally told them we do not qualify because the condo is not owner occupied, among other things. One email said it was a CalHFA program, but I didnt see that on the paperwork.

All credit cards but one still remain the same, but some work clearance issues are starting to come up. I can't go into details but anyone with any type of clearance needs to talk about their situation in length with their security team.

Oh ya, CalHFA stop reporting us late on the our credit reports after that "BANK ADJUSTMENT / DEED IN LIEU / BANK LIQUIDATION" notice in June. I really wished they would have offered us a Deed in Lieu but oh well I still don't know what it means.

[stuckinsandiego]

***BIG UPDATE***

CalHFA teased us by sending a letter to call them regarding our account so no further action can be taken. I thought hey maybe a Deed In Lieu offer.

Well no, it turns out they just wanted to say the sales date is set for 9/14/11 and we need to be moved out by then (already moved out). She wanted our new address for the tax paperwork. Still don't see the NOS on the recorder's website though.

So we are going back to the condo this weekend to collect all our last things and kiss it goodbye! My HOA says I have to make a half payment for September since it will still be ours half a month, and that we will get notices for late payments until the bank sends them the transfer docs, but I can ignore them.

[stuckinsandiego]

Received the NOS today, though it is not a copy of the recorded document. I still don't even see it on the recorder's website, but the date is set for the 14th of September. The amount listed due is the amount of the 1st CalHFA loan, it is not counting the two silent loans with CalHFA (nor the two other loans with the city program)

[nacho1mom]

if you get help with the Keep Your Home California "Umemployment Assistance" program, it is just 6 months of paying your mortgage, up to $3000/mo. It is then added to your loan as a "Jr. loan."

With 44.4% of the unemployed Californian's being out of work 27 months or more, this is only marginally helpful.

Haha ya I wouldn't worry about the other neighbors. You are doing what is best for you, not them. If you do speak with your neighbor again, I'd encourage him to get help from calHFA. It seems like the government money they got is only going towards people who have been laid off. There is an unemployment payment program, he should check it out. Those are the only cases I have heard where they approved funds.

Still haven't heard a peep from the city. They should have our cell #'s on file so if they wanted to call they could.

I don't think they are moving "fast" yet, I am two payments late so sending that type of letter seems standard. I imagine a notice to accelerate would come next in May after I miss this deadline. I already sent my letter stating no further payments would be made so there is no need to respond.

[stuckinsandiego]

THE END

Our CalHFA condo was officially foreclosed on today. I assume it went back to the lender. From the first missed payment March 1st to now it took just over 6 months total. Now we are ready to move on with our lives!

[TomEason]

stuckinsandiego

Thanks for your update and for chronicling your saga. Good luck to you!

[NegativeValue]

THE END

Our CalHFA condo was officially foreclosed on today. I assume it went back to the lender. From the first missed payment March 1st to now it took just over 6 months total. Now we are ready to move on with our lives!

Hi stuckinsandeigo

Thanks for keep us posted on your FC process and the final ending. Have the banks sent you anything regarding the mortgage now that the condo is gone.

Good luck and congratulations (if that's a good think to say in these circumstances).

negative value.

[CA_Owner]

stuckinsandiego & Screwed11
Please forgive me for intruding on your private thread. I can't help but offer this info. You both seem unclear on whether your city loans are non-recourse. Consulting with an attorney is OK, but the lawyer will cite Cal CCP Section 580(b) and charge you a bunch of $$ for doing so. No mortgage loan can be enforced that contravenes CA statute. You can have an expert pretend to examine the note and trust deed, but if those docs contain any clause which violates CA statutes, it's unenforceable. It's easy to download and read the statute for yourselves. If all your loans, as you indicate, are purchase money loans, then they are non-recourse. And since all foreclosures in CA for small residential loans are non-judicial trustee sales, the junior loans will be wiped out in a foreclosure by the 1st, and there is no recourse. The junior lender loses. Good luck to you both.

I just read through this thread and am wondering how exactly can I determine if my 2nd loan is a non-recourse loan. It's a CHDAP (CalHFA - Loan Programs - CHDAP) which I think is what the OP has. I thikn it is non-recourse because I got it at the time of purchase but it was specifically purposed for the down payment which seems like it might be a post purchase kind of thing.

what kind of phrasing do I need to look for to identify this?

[TomEason]

I just read through this thread and am wondering how exactly can I determine if my 2nd loan is a non-recourse loan. It's a CHDAP (CalHFA - Loan Programs - CHDAP) which I think is what the OP has. I thikn it is non-recourse because I got it at the time of purchase but it was specifically purposed for the down payment which seems like it might be a post purchase kind of thing.

what kind of phrasing do I need to look for to identify this?

CA_Owner

You won't find anything about it in your loan note or trust deed. Your loan is purchase money if it was a "purchase assist" loan. If you want a better definition of purchase money loan, I suggest you Google the term.

You might also refer to your purchase escrow statement. If the loan was funded to pay part of the purchase price, and you had no "constructive receipt" of the funds, then it's purchase money.

I recommend you also refer to Cal CCP Section 580(b).

[CA_Owner]

CA_Owner

You won't find anything about it in your loan note or trust deed. Your loan is purchase money if it was a "purchase assist" loan. If you want a better definition of purchase money loan, I suggest you Google the term.

You might also refer to your purchase escrow statement. If the loan was funded to pay part of the purchase price, and you had no "constructive receipt" of the funds, then it's purchase money.

I recommend you also refer to Cal CCP Section 580(b).

That section is VERY enlightening. It looks like my 2nd (from CalHFA) should be OK since it covered the down payment for purchase of the property while my 3rd (down payment assistance from Santa Clara County) is not OK since it was used to pay for the closing costs of the transaction even though that was at the time of the transaction.

Or that's how I interpret it anyway.

The section for those using this thread as a reference:

580b. No deficiency judgment shall lie in any event after a sale of
real property or an estate for years therein for failure of thepurchaser to complete his or her contract of sale, or under a deed oftrust or mortgage given to the vendor to secure payment of thebalance of the purchase price of that real property or estate foryears therein, or under a deed of trust or mortgage on a dwelling fornot more than four families given to a lender to secure repayment ofa loan which was in fact used to pay all or part of the purchaseprice of that dwelling occupied, entirely or in part, by thepurchaser. Where both a chattel mortgage and a deed of trust or mortgage havebeen given to secure payment of the balance of the combined purchaseprice of both real and personal property, no deficiency judgmentshall lie at any time under any one thereof if no deficiency judgmentwould lie under the deed of trust or mortgage on the real propertyor estate for years therein.

[TomEason]

CA_Owner

Thanks for your update. I believe your interpretation is in error.

It sounds as if you 3rd is also definitely purchase money, since the funds were used to buy the property (closing costs are always part of the purchase costs). Again, if you had no constructive receipt of the funds, it's purchase money. Refer to your escrow closing statement.

[soterania]

Hi,

I can totally relate with the postings in this thread. I'm wondering what happens with the taxes when the property goes into foreclosure. My 1st loan is with CALHFA and I have 4 silent loans (two of them with CalHFA and the other 2 with the city). I have missed payments already but I'm denied short sale. Reading back the chronicles of stuckinsandiego, in a couple of months I might be in the foreclosure already. This is my first home so I will probably not have to worry about the capital tax gains for the first loan but what about the other silent loans? Would I incur tax consequences on those when I file my taxes next year? I dread the thought of paying capital tax gains on those.
Please...any thoughts on these? Thanks...

[TomEason]

Hi,

I can totally relate with the postings in this thread. I'm wondering what happens with the taxes when the property goes into foreclosure. My 1st loan is with CALHFA and I have 4 silent loans (two of them with CalHFA and the other 2 with the city). I have missed payments already but I'm denied short sale. Reading back the chronicles of stuckinsandiego, in a couple of months I might be in the foreclosure already. This is my first home so I will probably not have to worry about the capital tax gains for the first loan but what about the other silent loans? Would I incur tax consequences on those when I file my taxes next year? I dread the thought of paying capital tax gains on those.
Please...any thoughts on these? Thanks...

soterania

I recommend you consult with your tax person.

How can you expect that anyone here would know enough about your overall tax situation to offer you credible advice?

[soterania]

soterania

I recommend you consult with your tax person.

How can you expect that anyone here would know enough about your overall tax situation to offer you credible advice?

I understand the limitations Tom. I was hoping that stuckinsandiego would have something to say about this. I understand that this person has silent loans too.

[RossmorePark]

CA_Owner

You won't find anything about it in your loan note or trust deed. Your loan is purchase money if it was a "purchase assist" loan. If you want a better definition of purchase money loan, I suggest you Google the term.

You might also refer to your purchase escrow statement. If the loan was funded to pay part of the purchase price, and you had no "constructive receipt" of the funds, then it's purchase money.

I recommend you also refer to Cal CCP Section 580(b).

Hi TomEason,

I've been reading all of your advice from a few different forums and I found that this subject is exactly what I need to clarified on my CalHFA silent loan. I looked at my escrow statement and it said the purpose of the loan is "Other: Balloon Money" rather than "Purchase". Is my silent loan still considered non-recourse?

By the way, thank you so much for helping people. I've been trying to refinance via HARP but MI could not transfer my MI to a new lender. My husband and I were so frustrated and we have decided to walk away. I feel confident after reading your advice. We are about to miss our mortgage for the first time in five years in Jan. 2013. I'm getting nervous that we're about to do this.

[TomEason]

Hi TomEason, I've been reading all of your advice from a few different forums and I found that this subject is exactly what I need to clarified on my CalHFA silent loan. I looked at my escrow statement and it said the purpose of the loan is "Other: Balloon Money" rather than "Purchase". Is my silent loan still considered non-recourse? By the way, thank you so much for helping people. I've been trying to refinance via HARP but MI could not transfer my MI to a new lender. My husband and I were so frustrated and we have decided to walk away. I feel confident after reading your advice. We are about to miss our mortgage for the first time in five years in Jan. 2013. I'm getting nervous that we're about to do this.

Thanks for your post (and your gracious remark) and welcome to the community. If your CalHFA loan funding replaced all or part of your cash down payment, then it's a "purchase assist" loan, aka purchase money loan. Escrow doesn't assign titles to loans. Bottom line: if the CalHFA loan reduced the amount of your contributed cash downpayment, it's a purchase money loan. As long as you didn't have constructive receipt of the funds, and then endorsed the funding check to CalHFA, all the CalHFA loan funds were used to purchase the property and funds were credited to the seller.

[RossmorePark]

Thanks for a quick response and clarification! I feel much better now.

Happy New Year!