Legal Question in Real Estate Law in California
Foreclosure Consequences in Riverside County,
Hello all
I originally had an ARM loan with WaMU which adjusted in 2007. I was paying $1800 and at time of adjustment it shot up to $2600 a month. Ending balance was $372k. I refied with BofA into 2 loans at end of 2007. I now have a 30 year fixed rate mortgage (6.5%) for $320k and a 15 year fixed balloon (7.5%) for $60k. $380k total. The refi has left me paying $2,022 + $430 monthly (all amounts exclude taxes and I pay no PMI). I've made every payment on time since January 2008 but at a cost. Monthly take home pay is $3200 so as a result,my money out has exceeded my money in. My savings have dropped by 50% over the last year and a half. I want to be rid of this home since it is only a matter of time before my money runs out.But in this market,selling it is out of the question. I believe my only option is foreclosure. I haven't made my Feb payment yet and I don't plan to. My main concern is can the bank come after whatever assets I have? My 401k, Cash in checking account, my salary and my 10-year old car are the only assets I have. If they can, how soon will they come after them? Should I take all my cash out of my bank account? How can I protect my assets as I will need these to move on post-foreclosure? BTW,home valu is $200k
3 Answers from Attorneys
Re: Foreclosure Consequences in Riverside County,
Yes, any refi lender can come after you with a deficiency judgment. That's the price you pay to refi. No one here is likely to advise you how to defraud creditors by hiding your money. How to try to legally protect it should be discussed with your financial advisers. You should try to negotiate a deed in lieu return of the property to the lender.
Re: Foreclosure Consequences in Riverside County,
California provides that you can not be held accountable for a deficiency in case you default on the mortgage; but only when the original purchase-money security interest still exists. If you refinance, you are not creating another purchase-money security interest -- you are simply refinancing your debt. When do you, you are effectively waiving this protection -- usually without knowing it. So, your refi is not protected. However; lenders very rarely seek deficiency judgments in most foreclosure cases. The deficiency would have to be significant and the lender would have to be reasonably sure that you would be able to pay. Before walking away though, have you considered trying to re-work the loan? I would take a shot at modifying the loan before letting the house go unchallenged. If you would like to talk about this, feel free to contact me.
All the best,
Bryan
619.400.4929
Re: Foreclosure Consequences in Riverside County,
If you owe $380K on a $200K property, walk away. Usually there are no "deficiency judgments" in California and they should not be able to come after any other money or assets of yours, although they may try and scare you. The foregoing advice is worth what you paid for it.
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