Legal Question in Real Estate Law in California
Foreclosure scenario
I am a owner of three homes. 1st home is paid off and is a rental property, second home is where I live and has a mortgage, third home is a rental property with a mortgage. I am upside down on the third property. I owe 360,000 and it was assessed for 295,000. I have a variable rate mortgage that is due in a year for the third home. My first question is: Is it wise to keep the property? Second question: If I were to foreclose, would it affect home 1 and 2? Third question: If not, how do you start the foreclosure procedure? Fourth question: If foreclosure were to occur for home 3, do I still pay the property tax of that home for the following year?
2 Answers from Attorneys
Re: Foreclosure scenario
Sometimes you can try to do a deed in lieu of foreclosure, if the lender agrees. I would certainly have an attorney assist you with it after reviewing your case in detail.
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Re: Foreclosure scenario
The one who forecloses is the lender of the money; you would be foreclosed against by the bank, which controls when the process begins. Until it is sold at the non-judicial sale [normally on the court house steps] you are the owner and laible for real property taxes.
Your being foreclosed on on the third house would not effect the first two loans unless there was a provision in those mortgages saying the bank can renegoiate the loan if your are foreclosed on on another property. It will effect your credit rating and apply to borrow for other properties.
Before you walk away from the third house see what you can do with the lender; it may take them several weeks before they tell you anything. There are companies listed on the web that charge around $3,000 plus or minus to try to get a modification for you.
As to whether you should walk away after doing the above, even if you supplied more information we could only guess.
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