Legal Question in Real Estate Law in California

Wanting a foreclosure
Not sure what and how to do this. I moved to Colorado 12/08 and still own a condo in San Diego, CA. The prices have dropped to $190k. I am in a neg-am loan that rises each month currently at $280k. My second is $44k with a different bank. I pay $750 towards the property and my renters cover the rest. That is already too much for me to pay and I'm financially drained. My renters are now paying late and this month have only paid half. I would like to know what I can do to just foreclose on the property and get out from under it. It is just an incredible burden and it will be MANY years before the market value is equal enough to sell and break even. I am close to the top of my pay scale and can't afford to do this any longer. Can someone help guide me towards a fast forclosure? Will I be responsible for the balance? What are my rights?

Asked on 6/24/08, 4:30 pm

3 Answers from Attorneys

Robert Mccoy Law Office Of Robert McCoy

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Re: Wanting a foreclosure

California Law covers the law regarding the process of foreclosure. You cannot foreclose on your own home. However, you can rest assured that if you stop making your payments the bank will foreclose for you.

As this is not your primary residence, it is possible you will be liable for a deficiency after the foreclosure sale. The first will probably bid the entire amount that is owed to it, so you probably will not owe the first anything. However, the second may sue you for what is owed to it.

I would recommend you talk to a bankruptcy attorney in Colorado, if you consider it the state of your residence, about discharging the deficiency in bankruptcy.

Whatever you do, do not talk to the bank holding the second. They may not know this house is not your residence. Once they find out, then they will have grounds to sue you.

Answered on 6/24/08, 8:11 pm

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Richard Gee

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Re: Wanting a foreclosure

I am admitted in both California and Colorado. Assuming the lender proceeds with what is known as a non-judicial foreclosure (i.e., it forecloses without bringing a foreclosure lawsuit - the typical way this is done in California), then, under the California anti-deficiency laws, if the first mortgage is a purchase money one (and it more than likely would be considered such), then all the bank can do is foreclose and sell - they cannot get a deficiency judgment if the sale price is less than the amount due under the loan. This means that, upon a foreclosure sale, the bank will have no further recourse against you on the first mortgage.

The second, however, is a different story. Assuming that the first mortgage holder is not able to obtain all of its money in a foreclosure sale, that means there will be no money for the second to be paid. As that is not a purchase money obligation, and in this scenario the first trust deed holder would wipe out the security interest of the second in the property, the second could bring a deficiency lawsuit against you for the full amount of the second.

Hope that helps. Good luck!

Answered on 6/24/08, 8:15 pm

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