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I am married and I've owned a condo I've rented to tenants for about 5 years and have been paying out of pocket to make up the difference because I can't get the rent to cover the cost of the loan, homeowners fee, hazard insurance and property taxes. The property market value has dropped way below the loan amount and I can't sell the property to pay off the loan. If I decide to default and go into foreclosure, what are my legal and financial liabilities? Can I be forced to pay or have liens attached to any of my assets? I'm aware it will affect my credit very negatively. What are my other options that will not require large financial costs? Your response will be greatly appreciated.

Submitted: 90 days and 10 hours ago.

Category: Legal

Value: $18

Status: CLOSED

State/Country relating to Question: California

Already Tried:
Tried to refinance but I could not because the property value is insufficient to secure a loan of any kind without getting a second mortgage.

Posted by DCrane 90 days and 10 hours ago.

Answer

Since the condo is not your primary residence, you do not have the protection of being able to walk away with immunity per California law. If you decide to default, the lender will foreclose then seize the home, and come after you via a court judgement (default judgement) for the difference between what they are to sell the home for and what is owed on it, plus foreclosure/legal fees. To satisfy the default judgment the creditor will do one or all of the following:

place a lien on your home;
garnish you wages;
freeze your bank accounts;
place a lien on any other property you have of value.

You should consider a deed in lieu of foreclosure as an alternative. That way the lender would agree to accept the deed and not come after you.

90 days and 10 hours ago.

Reply

Thank you for the information.
What is a deed in lieu of foreclosure? What do I have to do and how shall I go about getting a deed in lieu of foreclosure done?

Accepted Answer

A DIL is where the bank takes back the deed on the property and permits the owner to walk away without any recourse in regards to collection efforts from the bank. You should contact the loss mitigation department of your mortgage holder to discuss this option.

Accepts:
Expert:	DCrane
Pos. Feedback:	98.7 %
Answered:	8/23/2009

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Optional Information

State/Country relating to Question: California

Already Tried:
Tried to refinance but I could not because the property value is insufficient to secure a loan of any kind without getting a second mortgage.

Answer

Reply

Thank you for the information.
What is a deed in lieu of foreclosure? What do I have to do and how shall I go about getting a deed in lieu of foreclosure done?

Accepted Answer

A DIL is where the bank takes back the deed on the property and permits the owner to walk away without any recourse in regards to collection efforts from the bank. You should contact the loss mitigation department of your mortgage holder to discuss this option.

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State/Country relating to Question: California Already Tried: Tried to refinance but I could not because the property value is insufficient to secure a loan of any kind without getting a second mortgage.

Answer

Reply

Thank you for the information. What is a deed in lieu of foreclosure? What do I have to do and how shall I go about getting a deed in lieu of foreclosure done?

Accepted Answer

A DIL is where the bank takes back the deed on the property and permits the owner to walk away without any recourse in regards to collection efforts from the bank. You should contact the loss mitigation department of your mortgage holder to discuss this option.

Related Legal Questions

State/Country relating to Question: California

Already Tried:
Tried to refinance but I could not because the property value is insufficient to secure a loan of any kind without getting a second mortgage.

Thank you for the information.
What is a deed in lieu of foreclosure? What do I have to do and how shall I go about getting a deed in lieu of foreclosure done?