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Richard
Richard, Attorney
Category: Legal
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Experience:  Attorney with 29 years of experience.
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Back in 2005 I bought a house for investment purposes and I

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Back in 2005 I bought a house for investment purposes and I used it as a renter but the notes were bigger than the rent. In 2006 I could no longer keep paying paying out of pocket to come up with the balance. So I gaved it up and just walked away. The bank short saled the house.
Now I still get letters from the 2nd lender(the 2nd mortgage banker) trying to collect money on the 2nd loan. Do they have a legal right to come after me for that 2nd loan?
Submitted: 7 years ago.
Category: Legal
Expert:  Richard replied 7 years ago.
Good evening to you.   It depends on the state the property was in. If the property is in a deficiency state, the lender can pursue you for the deficiency. If the property is in a non-deficiency state, the lender can only look to the property.   Can you provide that info?
Expert:  Richard replied 7 years ago.
<p>I see now the property is in California....that did not show up on my original screen.   </p><p>   </p><p>California is a non-deficiency state.   Basically, deficiency judgments in California work like this:   i) Deficiency judgments cannot be entered for foreclosures by private sale or on purchase money mortgages; and ii) A lender cannot get a deficiency judgment if it forecloses by private sale or if the underlying loan was a purchase-money loan. Notwithstanding the above, deficiency judgments can be entered on judicial sales of <em><u>non</u></em>-purchase money mortgages-provided however the defaulting borrower then has the right to redeem his property.   </p><p> </p><p>The botXXXXX XXXXXne of all this is that if you obtained a mortgage to purchase a home in California, you are not be responsible for any amount remaining unpaid after a foreclosure sale. As a result, other assets are not at risk.   If your debt is not a purchase money mortgage, in reality, because of the right to redeem, most lenders in California waive the deficiency.   If the deficiency is waived, so also is the right to redeem.</p><p>   </p><p><em>I hope this has given you the guidance you were seeking. I wish you the best of luck!</em></p><p> </p><p><em> If I have adequately answered your question, even though the answer might not have been the one for which you hoped, I would appreciate it if you would <u>please click the GREEN ACCEPT button </u></em><em><u>NOW</u></em><em>, so that I receive credit for my work; otherwise, though you have made a deposit, I do not receive credit.</em></p><p> </p><p><em> If you need additional clarification on this question after clicking ACCEPT, please do not hesitate to click Reply and I will be happy to do what I can to help you further. Thanks for allowing me to be of service to you. </em></p><p> </p><p><em>The information given here is not legal advice. As all states have different intricacies in their laws, the information given is general only. This communication does not establish an attorney-client relationship with you. I hope this answer has been helpful to you.</em></p>
Customer: replied 7 years ago.
what is a purchase money mortgage? that most lenders in California waive the deficiency but that some will not waive it.
Expert:  Richard replied 7 years ago.
<p>A purchase money mortgage is a loan taken out to purchase the property.   For non-purchase money mortgages....refinancing an purchase money mortgage will still qualify as a purchase money mortgage, but second loans where you take cash out are non-purchase money mortgages...it's up to the lender's discretion....most don't bother, but they are not prohibited from pursuing the deficiency. </p><p> </p><p> </p><p><em>I hope this has given you the guidance you were seeking. I wish you the best of luck!</em></p><p> </p><p><em> If I have adequately answered your question, even though the answer might not have been the one for which you hoped, I would appreciate it if you would <u>please click the GREEN ACCEPT button </u></em><em><u>NOW</u></em><em>, so that I receive credit for my work; otherwise, though you have made a deposit, I do not receive credit.</em></p><p> </p><p><em> If you need additional clarification on this question after clicking ACCEPT, please do not hesitate to click Reply and I will be happy to do what I can to help you further. Thanks for allowing me to be of service to you. </em></p><p> </p><p><em>The information given here is not legal advice. As all states have different intricacies in their laws, the information given is general only. This communication does not establish an attorney-client relationship with you. I hope this answer has been helpful to you.</em></p>
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