Legal Question in Real Estate Law in California

Re: Can lender claim deficiency judgement?

Lender generally cannot seek deficieny on a purchase loan... There is no form available for this. I am a lawyer and a real estate broker -- i.e., a real estate attorney and I do specialize in loan modifications and actually initiating suit against lenders for predatory loans, truth in lending, and other issues. I negotiate loan modifications and can likely assist you for a reasonable fee. Sometimes, if the violations are bad enough, we can completely negate the loan. Contact me to schedule an appointment and thank you for your consideration.

Christopher Brainard, Esq.

310.266.4115

Re: Can lender claim deficiency judgement?

The answer is probably not if you have only one mortgage. If there is only one mortgage on the condo, and it forecloses non-judicially (90% of all residential foreclosures are non-judicial), then they are barred recovery of a deficiency from you under something called the one-action rule. If there are two mortgages, you may still be protected if they are both purchase money, however, you may have changed the character from a primary residence by moving out, which can affect deficiencies. You need to review with an attorney in more detail the exact facts to make a determination of what your potential exposure is. Mortgage Debt Foregiveness is a different matter entirely, and has to do with the potential of income tax implications from foreclosure. A deed-in-lieu is generally not an option, as lenders are very wary of voluntarily accepting a property back. Their concern is that while a foreclosure wipes-out any and all obligations behind them, with a deed-in-lieu, they take the property subject to any obligations before or after them. You can try, but you also then need an agreement from them to accept the property as satisfaction-in-full of your obligation to them. A deed-in-lieu does not protect you from the potential of a deficiency by default.

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