Legal Question in Real Estate Law in California

Re: income too high to foreclose without being sued?

As the debt owed on your home is purchase money debt, you should not owe a deficiency if the house is foreclosed upon and you will not owe any property taxes.

Re: income too high to foreclose without being sued?

First of all, YOU do not foreclose, the lender does. Secondly, a "purchase money" second deed of trust ordinarily would be non-recourse and thus there would be no ability on the part of the lender(s)to sue you after the fact. HOWEVER, you mentioned that the loan was 100% financed...many of such loans were fraudulently made, in that the holder of the first trust deed often was unaware that the borrower was not putting any money down and was getting a second trsut deed loan at the time of purchase, and if that is the case with you, you may have exposure to a judicial foreclosure, where you are sued by a lender through the courts, rather than by way of a trustee's sale, and then the lender seeks to get a judgment against you for the difference between the amount of the loan and what the house brings at a foreclosure sale. The same thing could happen if you lied in any way in the loan application, by either inflating your income,or saying the house was going to be your principal residence but was, instead, to be a rental, etc. Lastly, at the time of a foreclosure, you may be subject to paying income taxes on the amount of debt that was forgiven. Before you elect to permit a foreclosure, it wiould be prudent to take all your loan documents to a real estate attorney for review.