The article is written for the purpose of educating the public on anti - deficiency legislation and whether it is possible to simply stop paying on your real estate loan if it is "underwater."
In many states, some form of consumer protection has been enacted by the state legislature. This prevents banks from suing homeowners for deficiencies. These laws typically apply to single family owner occupied residences.
In California, for example, the legislature enacted Code of Civil Procedure section 580b which prohibits a deficiency judgment in the strict sense, i.e., a personal judgment against the debtor. In relevant part the code section provides as follows:
"No deficiency judgment shall lie . . . . . for failure of the purchaser to complete his or her contract of sale, or under a deed of trust or mortgage given to the vendor to secure payment of the balance of the purchase price . . . . .or under a deed of trust or mortgage on a dwelling for not more than four families given to a lender to secure repayment of a loan which was in fact used to pay all or part of the purchase price of that dwelling occupied, entirely or in part, by the purchaser."
"No deficiency judgment shall lie . . . . under a deed of trust or mortgage given to the vendor to secure payment of the balance of the purchase price of that real property . . . . or under a deed of trust or mortgage on a dwelling for not more than four families given to a lender to secure repayment of a loan which was in fact used to pay all or part of the purchase price of that dwelling occupied, entirely or in part, by the purchaser."
What this means in California, is that a homeowner who gets a loan the purpose of which was to "purchase" his or her house cannot be sued by his bank on the "purchase money" loan. If, however, there was a refinance or a loan placed on the house after the purchase the homeowner would be wise to consult with a California real estate lawyer as there is a very real possibility that the bank can and will sue for an unpaid non - purchase money loan.
While strategic defaults are permissible in many states, depending on the nature of the loan and property, you should consult with an attorney in your state to find out if your state has such statutes permitting strategic defaults and whether or not the statutes apply to you.
While this type of statute has been adopted in many states not all states have such consumer protection statutes and you should check with an attorney in your state to find out whether or not it applies to you.
After making the determination, that you are in an anti - deficiency state, a strategic default is up to you.
Strategic defaults, however, are not without consequences to your credit. It is always best to evaluate all factors and to seek legal advice from a real estate attorney in your state.
Author Mitchell Reed Sussman is a California real estate attorney specializing in real estate, foreclosure and bankruptcy.
In many states, some form of consumer protection has been enacted by the state legislature. This prevents banks from suing homeowners for deficiencies. These laws typically apply to single family owner occupied residences.
In California, for example, the legislature enacted Code of Civil Procedure section 580b which prohibits a deficiency judgment in the strict sense, i.e., a personal judgment against the debtor. In relevant part the code section provides as follows:
"No deficiency judgment shall lie . . . . . for failure of the purchaser to complete his or her contract of sale, or under a deed of trust or mortgage given to the vendor to secure payment of the balance of the purchase price . . . . .or under a deed of trust or mortgage on a dwelling for not more than four families given to a lender to secure repayment of a loan which was in fact used to pay all or part of the purchase price of that dwelling occupied, entirely or in part, by the purchaser."
"No deficiency judgment shall lie . . . . under a deed of trust or mortgage given to the vendor to secure payment of the balance of the purchase price of that real property . . . . or under a deed of trust or mortgage on a dwelling for not more than four families given to a lender to secure repayment of a loan which was in fact used to pay all or part of the purchase price of that dwelling occupied, entirely or in part, by the purchaser."
What this means in California, is that a homeowner who gets a loan the purpose of which was to "purchase" his or her house cannot be sued by his bank on the "purchase money" loan. If, however, there was a refinance or a loan placed on the house after the purchase the homeowner would be wise to consult with a California real estate lawyer as there is a very real possibility that the bank can and will sue for an unpaid non - purchase money loan.
While strategic defaults are permissible in many states, depending on the nature of the loan and property, you should consult with an attorney in your state to find out if your state has such statutes permitting strategic defaults and whether or not the statutes apply to you.
While this type of statute has been adopted in many states not all states have such consumer protection statutes and you should check with an attorney in your state to find out whether or not it applies to you.
After making the determination, that you are in an anti - deficiency state, a strategic default is up to you.
Strategic defaults, however, are not without consequences to your credit. It is always best to evaluate all factors and to seek legal advice from a real estate attorney in your state.
Author Mitchell Reed Sussman is a California real estate attorney specializing in real estate, foreclosure and bankruptcy.
About the Author:
Want to find out more about walking away from your mortgage, then visit attorney Mitchell Reed Sussman's site on how to "walk away" from your mortgage without being sued by your bank.
No comments:
Post a Comment