Foreclosure in 95206>Question Details

Chris, Home Seller in Stockton, CA

What happens to existing financial assets during foreclosure and to Job ?

Asked by Chris, Stockton, CA Thu Oct 2, 2008

I bought house in Stockton three years ago for $300k. The house is worth about $140k now, but the loan is still $290k. I relocated to bayarea because of job shifted this year and can't afford to pay payments at both places. I"m trying to get rid of the house or trying to ask the bank if they can modify the loan to $150k , but i doubt that bank will give me the house to $150k. I did put it for short sale but no offers are coming in because houses are not selling. My question is if I went to foreclousure how bad will my credit get and for how many years. Will bank come after my paychecks or anyother personal bank accounts? Do i still have to pay the debt if bank takes the house and sells it for less then the loan amount, what will happen to that difference. What options i have ?

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Sorry to hear about your situation. Rest assured my friend, you are not alone. Generally speaking, a foreclosure will stay on your credit report for about seven years. A short sale is the lesser of two evils in this situation. Your lender will be willing to work with you more than you would expect. They will lose the most if the house does go through the foreclosure and back into their portfolio of properties. Submit any offers to your lender no matter how low you think they are or if you think they will accept it or not. Think of yourself as the middle-man and remove any emotions. You didn't mention if you are behind on your payments. Typically, they will not entertain a short sale unless you are at least one month behind. Your lender typically can not garnish your wages or impound any funds from your bank accounts. You are referring to what is called a "deficiency judgment". They will let you know of they will give you a judgment before the short sale is approved. Do NOT bring this up while you are negotiating with them. Move forward assuming they will not issue a judgment against you. The mortgage secures the real estate as the collateral against the promissory note. I know you are personally responsible for the note but they rarely get a judgment against the holder of the note. They write off the difference as a loss. If you have two loans, you have two loans to negotiate. Don’t give more than $1,000 to the junior lien-holder. Reason being, they have to pay off the first bank to be in first position. They will never do that since that will put them in your shoes - paying more for something that what it is worth. Ask for an "acceptance letter" to give to your title company so you can close as soon as possible. You can do it. I hope this helps.
1 vote Thank Flag Link Thu Nov 20, 2008

I do a lot of short sales everyday and this what I would suggest to you. I could give you a detailed answer to your question but my answer would be based on Washington State Foreclosure Laws. You need to google your state and foreclosure laws. You are looking to find out if your state is a non-recourse or recourse State. I BELIEVE CA. is a non recourse State. What that means is that your home is securred by the collateral only. If it is a recourse state then you can be held personally liable for the debt.

Foreclosure is on credit for 7 years. Short Sale for 2-3. The short sale shows up as "settled". It may be on your credit longer than 2 years but you will be able to purchase again if everything gets better for you which I'm sure it will.

You do not have to be behind in your payments to start a short sale. If your home is listed and it has been on the market longer than 60 days you should be lowering that price to get it sold. Your agent should be able to show the lien holder that you have tried to get a buyer at the highest price possible. The bank does not want your house back!

Please use an experienced agent with short sales. There is no reason your home should not sell by short sale. None.

If you need a referral let me know.

Loan Modification - don't doubt the 150k loan mod. I'm not saying they will and I'm not saying they won't. I am saying many many many many days I am shocked at what the banks WILL DO. so ask.

Good Luck to you and please be persistent. Doing nothing does nothing. I applaud you for getting the information you need to make an educated decision!

1 vote Thank Flag Link Fri Apr 10, 2009
My father owns a home, however, has made an agreement years ago that my brother take the house over.
My brother has been delinquent with making payments for over two months now. The bank has been calling and sending collection letters to the home. My father never formally transferred ownership of the home to my brother, therefore, his name is still on the deed. I'm sure this has affected my fathers credit. Should the house go into foreclosure, will the bank try to seize my father's
personal assets such as bank accounts and retirement investments?
0 votes Thank Flag Link Sat Feb 12, 2011
Chris.. i would like to speak to you... same situation... please email me @ houe situation in the subject line .. so i will know it's from you ~~~

Looking forward to speaking to you ASAP,
0 votes Thank Flag Link Tue Sep 29, 2009
California is non-recourse but only for purchase money. I am guessing from the loan amount that the loan is purchase money, so you might have some options. The agent with whom you have it listed should be able to refer you to professionals that might be able to help you. My suggestion would also be to talk with your tax professional and assess the impact on your tax situation of renting it out.

In a short sale they will ask for a financial statement, so EVERYTHING you have is on the table. Renting might be painful for a few years, but at least you'll have your assets and credit intact.
0 votes Thank Flag Link Sat Apr 11, 2009
Keith Sorem, Real Estate Pro in Glendale, CA
Please describe the type of mortgage you have. 80/20? 30-yr fixed? Do you have a HELOC or 2nd mortgage? Do you pay PMI? More information would help the folks on the board provide information.
0 votes Thank Flag Link Thu Nov 20, 2008
Depneding on your situation and circumstances and the type of financing for your home that you obtained the best thing to do is to consult with an attorney or a tax accountant to better answer your questions as was mentioned by the other agents.

Al Espinor
Chinchiolo Realtors
7301 Pacific Ave.
Stockton Ca.
(209) 351-3180
0 votes Thank Flag Link Tue Nov 11, 2008
The short answer is that Real Estates agents are not qualified to answer your question to the detail that you need. Talk to your accountant and also a good attorney if you haven't already done so. Good Luck.
0 votes Thank Flag Link Mon Oct 20, 2008
Hi Chris...

I am sorry that you have such a hard decision to make. There are many things that can determine what your options are. I would recommend that you contact your accountant to discuss what type of ramifications you may face. Also, I like to recommend a website that can also answer your questions, and help you form a plan to leave your property. They can help you with legal questions and credit questions. They have been featured on National News programs, and I have heard that they have helped many people.

I hope you find this helpful.

0 votes Thank Flag Link Thu Oct 2, 2008
Sorry to hear about your situation.
Here is a link that has a lot of info on your states foreclosure processes.

Best of luck
0 votes Thank Flag Link Thu Oct 2, 2008
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