Okay, now the only way a foreclosure in California will affect your Oregon home, is if the lender seeks a deficiency judgment against you for the difference of your loan balance and the foreclosed value or foreclosure sale price plus attorney and legal fees. So the question is; can the lender seek a deficiency judgment?
If the loan was used as purchase money, to buy the house, then you are protected. California Code of Civil Procedure 580b prohibits a lienholder from seeking a deficiency judgment in California for purchase money loans. Also, I believe there's another law that stipulates once the lender proceeds with a foreclosure, that lender cannot seek a deficiency judgment.
If you short sale, then the 1st mortgage will not be able to seek a deficiency judgment either (so it says on California Association of Realtors Short Sale Information form).
Why foreclose if you have equity in another property? You can put a loan on your Oregon property, to satisfy your delinquency on your California property.
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One other thing to look into is placing the Oregon property into a land trust with two beneficiaries--you and someone else who wouldn't be on the hook for the California foreclosure. I'm not a lawyer, so this isn't legal advice. But while real estate is real property, a land trust is personal property (and isn't subject to the same limits as real property). So: Ask your lawyer how to use a land trust to protect your Oregon property if he/she says that the Oregon property might be vulnerable.
Hope that helps.
Very sensitive matter,please seek a legal advise. Mortgage company for the house in California may accomplish a Deficiency Judgment against you at the court, then They will be able to come after your house in Oregon. Please talk to a real estate attorney asap.
Zaza Pasori | PenFed Realty
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