Legal Question in Real Estate Law in California
Foreclosure Consequences in California
Hello, I refinanced 3 years ago. I have a 1st and 2nd loan. I've been working to modify the loan. I live in a townhouse.
The modification continues to be to expensive for me to pay. What would happen if I walked away from the property and the bank foreclosed.
Would I have to pay anything on the 1st or 2nd mortgage?
2 Answers from Attorneys
Re: Foreclosure Consequences in California
Yes on both. That's called 'deficiency judgment' for any unpaid balance. Or, you could file bankruptcy.
Re: Foreclosure Consequences in California
A lender is entitled to seek a deficiency judgment in most cases where the loan is not purchase money. You might be protected IF the refi was with the original (purchase money) lender. Also, a foreclosing lender seeking a deficiency judgment must go to court to foreclose, rather than use a trustee sale. This is more expensive and takes time, so unless you are a rich guy, or the lender is PO'ed at you for some reason, there is a pretty good chance it won't bother, but don't count on it.
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