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Good morning. You can just let the house go in California and the lender cannot pursue you for any deficiency because California is a non-deficiency state. Under CA's statute, deficiency judgments cannot be entered for foreclosures by private sale or on purchase money mortgages. A lender cannot get a deficiency judgment if it forecloses by private sale or if the underlying loan was a purchase-money loan. But, a deficiency judgment can be entered on judicial sales of non-purchase money mortgages-but in that event the borrower has the right to redeem his property. In summary, if you obtained a mortgage to purchase a home in California, you have no personal liability for any amount remaining unpaid after a foreclosure sale. That keeps your other assets safe. But, if your debt is not a purchase money mortgage, even though the lender has a right to a deficiency, the reality is most lenders in California waive the deficiency. The waiver of the deficiency also waives the right to redeem. I wouldn't bother with a short-sale...I would simply let the bank foreclose....the agent will push the short sale because he gets a commission on that, and not on a foreclosure.....but it is not to your advantage to go through the brain damage of a short sale.
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