Foreclosure on an Investment Home in California?

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I bought an investment house over 2 years before the bubble burst, but the neg am loan eats equity. It is located in California, is that my lender Hauptwohnsitz.Der does not change the loan terms so that it makes more sense in the 12 months we verdanken.Wenn more than market value, we decided to leave the lender is going to be a foreclosure or short sale the lender is entitled to take against my principal residence that is not part of the note or deed. We asked the lender to work with us, they are just back and it seems they prefer leasing activities, instead of mortgage activity. So in California they can go in your principal residence, in terms of investing at home in any way. Incidentally, they are different lenders.

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  1. Reply
    Emily S
    April 29, 2011 at 11:48 pm

    i dont know

  2. Reply
    April 30, 2011 at 12:37 am

    I would get some legal advice. It may be best to sell it now at a cut-rate price even if all your equity is eaten up – you definitely don’t want to go into foreclosure.

  3. Reply
    April 30, 2011 at 1:17 am

    No, california is a non-recourse state. A nonrecourse debt or non-recourse debt or nonrecourse loan is a secured loan (debt) that is secured by a pledge of collateral, typically real property, but for which the borrower is not personally liable. If the borrower defaults, the lender/issuer can seize the collateral, but the lender’s recovery is limited to the collateral. If the property is insufficient to cover the outstanding loan balance (for example, if real estate prices have dropped), the lender is simply out the difference. They cannot go after your primary residence.

    However, since it was investment property, they will most likely notify the IRS via a 1099 as to the shortfall and it will be considered taxable income.

  4. Reply
    April 30, 2011 at 2:13 am

    In Wisconsin they can’t go after a property not attached to the loan. I would check with a Real estate property lawyer if I were you. Is it possible that your property could be affected by the fires going on now. That would solve the problem lol. Good luck and God bless.

  5. Reply
    April 30, 2011 at 2:41 am

    You should double check with an attorney, but the only thing that the mortgage company can go after is the asset that securitized the loan. However, having a foreclosure on your record is not a good thing. I’d probably try to break even on deal if possible by selling the investment home, rather than go into foreclosure.

  6. Reply
    April 30, 2011 at 3:16 am

    gregorio had the best answer so far BUT I need to add the following:

    Per California anti-deficiency provisions a non-recourse loan/s is a loan/s secured by and used to purchase an owner-occupied residential property (1-4units) with that said your property does not apply since it IS an investment home and NOT an owner occupied. Therefore the lender may go after your other assets BUT I dont believe it will go after your primary home.

    Disclosure: I am not an attorney and you should get legal counsel from an attorney.

    My advice to you is if your property is loosing equity from both ends, by the depreciating market and the neg am loan, SELL it and cut your loses. If you have a foreclosure on your record it will be very hard for you to refinance your primary home if you ever needed to. If you sell your home as a short sale it will be MUCH better than getting a foreclosure on your credit, TRUST ME!

  7. Reply
    Kyle C
    April 30, 2011 at 3:47 am

    hey I’m a mortgage broker over in Rhode Island we are licensed in the state of CA please drop me an email or im with a name and number and time you can be reached we can go over the loan and see what we can do about getting you into a low fixed rate.

  8. Reply
    The Sender
    April 30, 2011 at 4:16 am

    here you go!
    Before choosing to go with the foreclosure, you should look into a few other options first. Refinancing is the option that most homeowners attempt first, but credit/income and tighter lending have precluded most homeowners from qualifying for a loan right now.

    Either way, you should list the house on the market just on the off-chance someone wants to purchase it before the foreclosure goes through. You can also try to work with the lender for a short sale, where you’d sell the property for less than what you owe on it. At least it will pay off the loan and save your credit a bit.

    If that doesn’t work, ask the lender about giving a deed in lieu of foreclosure. That works as just giving the property back to the bank, and they can’t go after anything else. They accept the deed instead of foreclosing or paying the loan, so there’s nothing else for them to go after. This is only slightly better than a foreclosure, but anything you can do to preserve your credit will help at this point.

    It will depend on how the bank pursues the foreclosure if they can sue you for another judgment and go after any other assets. With just the foreclosure, though, they are not entitled to anything else. You pledged the house as collateral for the loan — not your car, 401(k), or prize racehorse. So all that they can take as payment for the loan is the house.

    Look up California’s state foreclosure laws and consult your loan documents to determine what kind of foreclosure the bank can proceed with (Judicial or Non-Judicial). That will tell you if they can sue you afterwards and try to go after any other assets.

    Banks rarely sue for deficiency judgments, though, since they know that foreclosure victims don’t have a lot of extra cash or even the ability to borrow any money. It costs the lender extra time to sue you and there’s no guarantee they’d be able to collect on the judgment, so most don’t bother with the judgment at all.

    Hope that helps.

    Short sales:
    Deed in lieu of foreclosure:
    California foreclosure law:
    Deficiency judgments:

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