Legal Question in Real Estate Law in California
In California, I need to sell my home because the value is down about 200K. I can afford my home but don't want to keep paying on a losing investment. If the bank looks at my financial records and determines I can afford the home, will they reject a short sale?
How do I claim financial hardship?
Do I just stop paying mortgage for a couple months and then tell bank I want to do a short sale?
I know I'm not liable for the 200K difference in a short sale but what about the home equity line of credit, 40k? Do I stop paying on both home loans and real estate tax if I am looking to do a short sale? If I stop paying on all and save that money, can the bank go after it?
2 Answers from Attorneys
If you can make the payments, they will reject the short sale. You do not have a financial hardship if you can make the payments. You may be mistaken that you are not liable for the difference between the short sale and the amount owed on your mortgage. Only if it was an orginal purchase-money loan that has never been refinanced, or the lender agrees to waive the balance, would you not be liable. Same for the HELOC. Unless it was taken out at the time of purchase and used 100% toward the purchase, you will remain liable for it.
People who think they should sell their homes just because the market is in a temporary decline should not be allowed to own homes.
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