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i have a house in calif that is under water.i live in texas.when

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i have a house in calif that is under water.i live in texas.when we retired we tried to sell the house but could not. so we partially rented it out and paid the difference. now the payment is going way up and we can.t afford it because we are on social security and work part time to survive. its been almost five years .we can shortsell the house but the agent is worried about taxes we might owe which would be devasting to us.. what is the situation
Submitted: 3 years ago.
Category: Tax
Expert:  Richard replied 3 years ago.

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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Please be aware that the information provided here is not legal advice. Rather it is simply general information. All states have different intricacies in their laws and any information given is simply general information only and specifically is not intended to be, nor does it constitute, legal advice. This communication does not establish an attorney-client relationship with you. I hope this answer has been helpful to you.

 

Richard, Tax Attorney
Category: Tax
Satisfied Customers: 47044
Experience: 29 years of experience as a tax, real estate, and business attorney.
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