Opinions Please

[Jumbo101]

Hello everyone
Purchased home in 06 in California. I think the day we closed was the official end of the bubble.
1st Loan for 80% Second for 15%. Both are purchase money made at the time we bought.
The first is I/O for 10 years and the second is fixed for 15 with a ballon at the end.
New homes are selling for 300K less and falling further everyday. Would not surprise me to see another 50-75K at least in 09.
The 1st is with Aurora who has told me that my loan is held by a private investor, They cannot tell me who, but it is not held by Fannie or Freddie.
Does anyone think that I can refi these loans in 5 years with 250-350k to make up before the resets? Even if I can pay off 2nd loan I am still underwater 180K to 250K.

Would it be better to walk now and go rent?
There is alot of sentiment out there to pay the bills and ride it out, but does it make sense anymore?

I would love to hear some opinions. If you are in a similar situation and decided to stay how are you going to deal with the resets?

[Jumbo101]

Adding to this, I may owe California state tax on any forgiveness. Would you still walk or wait for a tax law change. Or go straight to bk.

[The Professor]

I would encourage you to read a number of postings I've made for California borrowers in the exact situation as you are in. Good news is you appear to be a candidate for California Code of Civil Procedure Section 580b, which relates to the potential non-recourse of your debt to the first and second lenders. That effectively means you can walk and not face personal liability for those debts. But, rather than walk, look at those discussions on this forum where the suggested approach is to remain in the home during the foreclosure period that will likely last somewhere between six months and a year from when you stop making payments, and as a reward for safeguarding the home the lender may exchange "cash for keys" when you vacate after the foreclosure sale has been completed.

Daniel

[Jumbo101]

Thank You shays, that was my plan if I went the foreclosure route, I've talked to some property managers that say even with a foreclosure you can rent, just more $ security deposit.

The state tax implications are a worry if they do not extend the law to match the federal one.

For anyone who is interested the senators that got the original tax bill passed in California are
Lou Correa from District 34
Michael Machado District 5

We should be contacting their offices and asking them to again amend the state tax laws.

Does anyone think it is wise to wait this out and be able to refi down the road?

[sharona]

I have the same worry as Jumbo 101. The Ca state taxes. Does anybody know if they will be extending the law?

Love this site btw. It has helped me immensly to understand the forclosure process.

[Jumbo101]

Check out the post "California State Tax" below.