Legal Question in Real Estate Law in California

Real Estate - Foreclosure

I have been supporting 3 rentals (all negative cash flow) out of my primary residence line of credit. That was cut off. After I refinanced my primary residence and the payment increased by $1200, I cannot keep the upside down homes. Two are in Hemet, CA and one is in Palm Coast, FL. I have investigated short sales in Hemet but the values are so low and there are so many homes for sale in the community that 2 short-sale specialists have declined to assist with it. I have missed the October payment. I've been told that if I walk, I'll get a 1099 for the amount of the difference. I'll live with that. We completed the paperwork Citibank's loss mitigation dept sent. The loss mitigation dept at the FL lender said they would do whatever it takes to get their money back if I default. What can I do to protect my primary residence?


Asked on 11/09/08, 10:54 am

4 Answers from Attorneys
George Shers Law Offices of Georges H. Shers

Re: Real Estate - Foreclosure

I have been told that at least until the klend of this year, the IRS will not treat the paper income of the debt reduction as income for tax purposes. Contact the IRS to verify this.

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Answered on 11/10/08, 10:41 am
Terry A. Nelson Nelson & Lawless

Re: Real Estate - Foreclosure

Nothing you haven't already tried. Make sure you have a homeowner's exemption filed on it. If you refinanced it, there probably is little equity in it, what with values continuing to decline, therefore the Florida lender might sue you for deficiency judgment and force you into bankruptcy, but the court wouldn't require your home be sold unless it would realize cash from the sale.

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Answered on 11/10/08, 1:17 pm
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

Re: Real Estate - Foreclosure

The FL lender's rights will probably depend upon Florida law, so you might want to re-ask it and specify FL law so you'll get answers from lawyers who practice there.

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Answered on 11/09/08, 12:34 pm
Robert Mccoy Law Office Of Robert McCoy

Re: Real Estate - Foreclosure

I do not practice Florida Law, so you will need to confirm with a Florida attorney, but my understanding is that there is no deficiency protection in Florida, meaning you could be sued. Sounds like you might want to look into other options like bankruptcy.

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Answered on 11/09/08, 9:16 pm


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