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LawTalk, Attorney
Category: Real Estate Law
Satisfied Customers: 37855
Experience:  I have 30 years legal experience. Additionally, in CA I held a Real Estate Broker's license.
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I own a condo in Orange County, CA and purchased it for $575k

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I own a condo in Orange County, CA and purchased it for $575k 4 years ago and put $90k upgrades throughout. Then the market crash and the assessed value in this over-55 senior community is now $430k to $435k. The balance on my loan is $460k and I have save some money to refinance but just not quite enough and I fear the interest rates will climb back up before I can get enough to refinance. So I am considering buying another home for about $350k (I qualify) and put down about $70k and then reluctantly walk away from my current condo. I pay about $3200 per month for P&I, tax, and HOA, and I could only rent it for about $1800 per month. If I walk away after purchasing the new home, what can be my consequences, if any. Can the bank (Wells Fargo) come after my assets in my new home? Also, I am going through a divorce and my wifes name is XXXXX XXXXX the mortgage. She rents in TN and I have informed her of this possibility. How can I get her name off the mortgage before I walk away? I really need this cash flow break to help offset the support payments.
Good morning,

I'm sorry to hear of your dilemma.

Presuming that the mortgage you have on your condo is the original mortgage and that you have not taken out a home equity line of credit, or refinanced with anyone but the original lender, then under CA law, you may walk away from the property and the lender can only foreclose on the property. They may not seek a deficiency judgment against you. Neither could they seek to take any of your assets.

As for getting your wife's name off of the mortgage--you can't do that without refinancing the property, or paying the mortgage off, through a sale of the property or your payment in full of the mortgage.

Buy your new house before you walk away from your condo. Otherwise, you will have the foreclosure on your credit and you will likely find it impossible to by another property for several years unless you put a lot more down than just 20%.

Abandoning the property will affect both your credit and your ex-wifes. There is no way around it I'm afraid. If you have any follow up questions, you may ask them in this thread, even after accepting my answer.

I wish you the best in 2010.


Customer: replied 7 years ago.

Thank you for your prompt response. Will my wife still be held accountable after the divorce vs the separation status now? What about a Novation to get her off the current loan before I walk away? I could use the divorce as the excuse to do that when asking Wells Fargo? Or is refinance the ONLY option here to get her off the loan?


And you re correct, there are no second loans or equity loans.


Thanks again



Good afternoon,

If the lender accepted/or will accept a novation, then your wife should be fine. That would be a first though. I've never known of a lender stupid enough to just allow an obligor to be released from the note. That is a highly unlikely event, I'm afraid.

yes, even after divorce, with a court order granting you the property and an order that you pay the mortgage---if there is a foreclosure, your ex's credit will be impacted just as yours will.

Refinance, sale and complete pay off are the only ways to get your wife off of the note. As it stands now, you are in the enviable position of walking away and not owing anything. That is certainly preferable to paying perhaps tens of thousands to refinance just to clear your ex's credit problem. Is she willing to pay for that benefit out of her own pocket?

I wish you well.


Customer: replied 7 years ago.
Thanks again. One final question and I'll provide tip. If I refinance can I claim total credit for paying off my wifes portion of the $30k debt?
Thanks again.
Hi Jim,

I'm not clear on what you mean by receiving credit. And what $30,000 debt are you talking about? The difference between the mortgage and the condo value?
If you are required to bring the mortgage value down to the market value in order to refinance, and you do that with marital monies, then because the $30,000 you use to pay down the mortgage will have come from monies owned by the marital community---in effect your wife is paying half of that debt.

If by chance you are using your personal funds (such as inheritance money, or money you were given as a gift) then you could ask the court to take notice of that fact and to award you proportionately more of the marital property in the divorce.

Best regards,


Customer: replied 7 years ago.
Thanks again. Yes I would be refinancing with my personal funds. If I walked away, could that create a problem with the final support settlement? Any retribution for messing up het credit score? Also can I purchase new home and insist she not on loan even if she resists? Could she hold. up the purchase? Or can I legally close without her approval if that's the case.
Thanks agaim. My last question!
Good morning,

You may get credit for using your own money, but you'll take a chance that the court won't allow you the credit because you will be keeping the house---in theory.

Your wife can not sue you for walking away from the property. Just offer the property to her. She has no right to force the property on you. If she won't participate in keeping the property out of foreclosure, she can't blame you for letting it go. Offer to keep it if she'll participate in keeping it out of foreclosure---by allowing the court to credit you with half of the personal funds you have to expend to get her name off the mortgage. Or not---and just walk.

Some lenders will not give you a mortgage while you are married unless your spouse signs off on it. So you may literally have to wait until the day after you are divorced to close. But so long as you use your personal money your wife/ex can not prevent you from the purchase.

My last question...LOL Jim. Famous last words! Wink You can ask more questions.


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Customer: replied 7 years ago.

Hi Doug;


I received a letter from a company called Activus (Irvine, CA) and then visited them to discuss their offer to help me "restructure" my current condo loan. I owe $460k and the assessed value is $430k or likely less. They said that there are a variety of government mandates that require banks to restructure upside down loans, where proper paperwork is provided to a group of attorneys they work with and the attorneys submit to the bank holding the loan to restructure the loan such that the new loan balance will be the assessed value and then that value is reset to a 2% or 3% interest. So, for my situation, my new monthly mortgage payment would drop from $2700 to about $1300 per mo. And that the average person can not know the correct way to get banks to abide by the government rules. I would pay the attorney group $2300 for them to get the bank to restructure. Are you aware of such a process? Or are there specific l questions I should ask to see if this service is legitamit? In my meeting with them it seemed up and up. The banks are mandated to comply per the bail out money given to them, and where the banks have been intentionally holding this money form the average public person. Please let me know your thoughts. Thanks Jim

Good morning Jim,

I am aware of a lot of companies which are telling customers that this can be done. The reality is that the federal laws allow a company to restructure the mortgage, but I am aware of no law which FORCES them to do this. The law says the lender must modify IF a given set of circumstances exist. The usually don't all exist. I have read of literally hundreds of people pay thousands of dollars to these companies who promise the fix, only to find that months later the property is foreclosed on and they are out the money.

In my experience, these companies are merely submitting paperwork for you, the same paperwork you could submit by working directly with your lender. The law forces the lender to consider your request, and in some instances forces them to go to mediation with you on the issue----but there is no law which absolutely forces them to re-write your loan. There are too many loop holes in the law which allow the lender to say no, They can simply determine that you financial difficulties are not permanent, and they get to deny the modification.

Work directly with your lender and save a bunch of money.

Here is an interesting article:

I wish you the best.

Customer: replied 7 years ago.
Thanks. This representative mentioned that the bank is not being forced to restructure and that the correct paperwork and other submitted information is prepared exactly correct so to meet the specific requirements needed for the restructuring. He mentioned a 99% sucess rate, and I would of course continue with my payments until the restructuring is completed (about 2 months). He seemed very knowledgable and open. It did not seem like a fly-by-night operation.He was very candid in answerng my many questions when I visited this office. It seems like the banks conspire to avoid the average citizen and that it takes a knowedgable attorney to submit this properly to get the loan rstructured. I have already discussed refinance with two different Wells Fargo refinance experts that deal with upside down loans and have not been offered any restructuring possibility and even told that the government programs do not apply to my refiance options. Even if I pay more toward the mortgage balance to get my situation to fall within the government guidelines for refinancing (no mention of restructuring). What do you think? How could I check on the legitimacy of this restructuring company and their attorney group that handles this? Thanks again. Jim
Good morning,

The issue of legitimacy is subjective. The people who get modifications are thrilled. The others are not.

Take a look at this article:

If you can get the names of the attorneys who will be handling your case, you can look them up on the California Bar Association site and determine whether they have any discipline in the past.

I guess the reality is that, if you can afford the money to pay them, and you approach it knowing there is no guarantee---then go for it. Ask if there will be any additional fees or cost associated with the modification. And, ask for a signed fee agreement from the law firm which will be representing you. Inquire into what role the attorneys play, verses what role the company has in the entire process.

Best regards,


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Customer: replied 7 years ago.

Hi Doug;


I now have a similar question about walking away from a property. You previously mentioned that if I walk away from a CA property, there is no recourse for the bank to go after my other assets. I live in CA and perhaps that is part of the reason for this? I have a condo I rent in Memphis, TN and this property is also not increasing in value and has also declined. I will try to sell this asap, but if that is not possibe, I will consider walking away from this TN property.Would this situation be the same as walkiing away from the CA property? That is, would the bank be able to go after my personal assets? I currently have renters in this property. Would I need to give them notice that I am walking away? How much notice? Does the renter have any legal recourse? Also, in general, how do I handle my property tax and HOA obligations when walking away? Thanks again. Jim