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christygold, Lawyer
Category: Real Estate Law
Satisfied Customers: 462
Experience:  Currently manage over a hundred rental properties.
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Is North Carolina a non-recourse mortgage state. If you lose

Resolved Question:

Is North Carolina a non-recourse mortgage state. If you lose your job and are unable to pay the mortgage, what options does the lender have.
Submitted: 7 years ago.
Category: Real Estate Law
Expert:  christygold replied 7 years ago.

North Carolina allows non-recourse mortgages, but does not require them. You will have to look at your loan and mortgage documents to see which kind you have. More than likely, the lender would be able to pursue you for a deficiency judgment if the sale of your home does not cover the balance of your loan.

You should speak to your lender, because there are several options available to you. If you want to walk away from the loan and avoid a foreclosure, you can do a deed in lieu of foreclosure, where you simply give the home back to the bank and that is the end of it. They would agree not to hold you responsible for any deficiencies on the loan.

If you want to try to keep the home, many lenders are now offering lenient loan modifications. That means they might suspend your payments for a few months, offer interest only payments, or lower your monthly payments and extend the length of your loan. To do a loan modification you will have to provide all of your financial information to the lender.

It is my experience that if you talk with your lender they will be willing to work with you, whether by modifying your loan or by taking the house back and avoiding foreclosure.

If I have answered your question, please click Accept. I am happy to answer follow-up questions if you need clarification.

christygold and 2 other Real Estate Law Specialists are ready to help you
Customer: replied 7 years ago.

Where would I find out on my mortgage documents if it is non-recourse?


What do you mean that the lender can pursue me for a deficiency judgement? What is my liability and what assets can they attach.


You mentioned that I could use a "deed in lieu of foreclosure" and walk away. What is the likelihood that the mortgage holder will accept or do they have a choice?



Expert:  christygold replied 7 years ago.

A deficiency judgment occurs when a home is foreclosed and the sale price is less than the outstanding value of the loan.

Here is an example:

You owe $50,000 on your mortgage. The bank forecloses on the house and sells it but can only sell it for $30,000. There is a deficiency judgment for $20,000 that the bank can pursue against you by garnishing bank accounts or paychecks, or placing a lien on any other real estate that you own.

The mortgage holder does not have to accept a deed in lieu but they probably will, especially in the market conditions of today.

The document would specifically say "non recourse."

Let me know if you need any further clarification, I will be happy to help.


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