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RealEstateAnswer, Lawyer
Category: Real Estate Law
Satisfied Customers: 28370
Experience:  10+ years in handling Leases, Landlord-Tenant, Foreclosures,Mortgages, and Eviction cases
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I have a rental property that is upside down in value and we

Customer Question

I have a rental property that is upside down in value and we have not made a mortgage payment in 16 months. I want to walk away from this poor investment. I want to try and protect myself from future judgements from the lender. I am afraid to give the lender my financials informaton because I think it could red flag the file and then they might come after me. So a short sale or deed in lue seems hard to accomplish and maybe not in my best interest?
Submitted: 2 years ago.
Category: Real Estate Law
Expert:  RealEstateAnswer replied 2 years ago.

Good afternoon. I certainly understand the situation and your concern. Yes, if you want to try and prevent them from coming after you for any type of deficiency, then you would want to negotiate and settle with them, for a short sale or DIL and get them to agree to waive their right to go after you. The problem which you may face, since you can not have it both ways and they need to approve either of these, is that they are likely going to want to see a hardship, showing that you can not afford to pay the mortgage. For this, they may ask for you to submit and to review your financials and if they see there is something of value ( i.e. assets), then they MAY either ask you to pay X or could decide to go after you down the road. You are not going to likely be able to have it both ways, whereby their agree to this and do not make a good faith effort to see exactly what you have, so you need to decide if you want to go through the foreclosure process and allow your credit to take a hit or try and work something out. What you should be aware of is that

In Oregon, deficiency judgments are not allowed following nonjudicial foreclosures.

Limitation on deficiency judgments in judicial foreclosures. Deficiency judgments are allowed in judicial foreclosures, but not in foreclosures of residential trust deeds (Or. Rev. Stat. § 86.770). A “residential trust deed” means a trust deed on property that, at the time the foreclosure is started, is:

  • residential
  • occupied by the borrower, the borrower’s spouse, or the borrower’s minor/dependent child as a principal residence, and
  • consists of four or fewer residential units (Or. Rev. Stat. § 86.705).
Expert:  RealEstateAnswer replied 2 years ago.

I just wanted to follow up and see if you had any other questions or needed me to clarify something. I am here to help, so please let me know. Thanks!