I am foreclosing on my house in California. I have an 80/20 Loan. Can I just walk away?

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I got a first and a jumbo to get my house. My mortgage has sky rocketed and the property has dropped $ 200k in the past year.

I will be foreclosing on the house.

Do I need to pay back any of the loan? The 80 & 20 are from the same bank.

Please post only if you know the correct answer, not what you feel.
but, only if they include in the foreclosure paperwork, correct?

5 Comments
  1. Reply
    Anna
    May 4, 2011 at 1:09 am

    You don’t have the option of foreclosing on anything.

    The bank will do the foreclosing. They will offer the house for sale, often at an auction at the Courthouse door. (The bank will put in a shill to lowball the purchase price.)

    You will be responsible for the difference in the amount of the purchase price and the amount of your outstanding loans. This could be many thousands of dollars.

    Word to the wise: NEVER, NEVER, NEVER, BUY A HOUSE ON THESE TERMS!!! You couldn’t afford the house in the first place since you couldn’t make a reasonable down payment and get reasonable longterm rates.

    This is going to be a very expensive lesson on living within your means. Good Luck!!!

  2. Reply
    Real Estate Guy
    May 4, 2011 at 2:09 am
  3. Reply
    Viktor T
    May 4, 2011 at 3:05 am

    You don’t have to pay anything, if you have money to pay and 20% equity, why do you need to foreclosure on the house.

  4. Reply
    RedPersianKitty
    May 4, 2011 at 3:05 am

    Did you talk to the mortgage company to try to work something out? I feel bad for you being in this situation. Good luck to you.

  5. Reply
    Galvan
    May 4, 2011 at 3:20 am

    Billy, outside of us telling you that it will haunt you there is no way for any of us to really give you a clear answer. Did you talk to the mortgage company? They might be willing to work something out. If you have but the bank has decided to foreclose on the property your only realistic option to making sure that the damage is minimal would be to seek legal advice as not all states have the same laws. Also, I would request all documentation from your finance company and go over it a few times as the answer to your questions are more than likely in there.

    Viktor, He clearly mentioned it’s gone down 200K in value.
    80/20 loan does not mean he has 20% equity in the property. A piggyback loan is done so that the home owner can save money by not having PMI or as a means of 100% financing.

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