Legal Question in Real Estate Law in California

Short sale or foreclosure?

Our house mortgage payment would shoot up to $4,000 for minimum payment only from $2120 on September. We believe we would not be able to afford it since it is only my husband who is working while I babysit for our son. My question is, would a foreclosure be a good idea? We are just worried that the lenders would be running after us since it is a recourse loan. We only took out $10k for the upgrade of the house 2 years ago. It was said that California practices deficiency judgment. Will they take the little savings from the bank that we have in case we decide for a foreclosure? If we do short sale, would we pay for the taxes? Our house present value is $460 and the 1st mortgage rises to $523 already while the 2nd one is $62k. I would be looking forward to your response. Thank you!


Asked on 3/04/08, 1:34 pm

2 Answers from Attorneys
Judith Deming Deming & Associates

Re: Short sale or foreclosure?

Yes, if the loan in question is not purchase money, the lender can go after you for a deficiency. Likewise, if there is any fraud in the making or obtaining of the loan they can file suit for damages also. Fraud includes false statements made in the loan application, such as overstating income, etc. A short sale cannot be done unless the lender agrees to a reduced payoff and when you have two loans instead of just one loan, it is very difficult to put together such a transaction. You may want to consider a bankruptcy filing.

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Answered on 3/04/08, 1:48 pm
Mitchell Roth MW Roth, Professional Law Corporation

Re: Short sale or foreclosure?

Call me, I think I may have the solution for you.

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Answered on 3/04/08, 2:34 pm


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