The fact of the matter is that everyone helped and the Banks are not going to just sit there and accept everything like they had a target on their backs.
California is a Non-Recourse State: What this means is that the State has protected us by putting up a thin shield against Deficiency Judgements. I don't know if this has been tested in the Courts yet, but I would predict that we are going to hear a lot more about this in the future.
Right now, these are your choices:
1.) Keep the Townhouse, live in it and ride it out.
2.) Keep the Townhouse, rent it out, accept the negative cash flow for 1-3 years and ride it out.
3.) Do a shortsale; you will have to submit a letter to your lender telling them why you need to do the shortsale; just being Upside-Down is not enough; you need to demonstrate financial distress amd/or insolvancy. If you try to do this, and you have a vacation home, three apartment complexes, $250,000 in the bank and a job that pays $300,000 a year, you might have a tough sell.
4.) You can let it go to foreclosure; force their hand: This will take a year or more to accomplish, you will have to stop paying your mortgage and after three months, start calling them. You will ruin your credit and you are in for a year from h--l.
5.) Do a Voluntary Foreclosure, that is; give them a Deed-in-lieu, and you can walk away right now. This won't be as bad for you as the full foreclosure, but it will still affect your credit.
6.) If you do the SS or the Foreclosure, it will 2-3 years until you can buy something else, assuming that you can reconstruct your credit.
Please do not shoot the messinger.
Good luck and may God bless
Ph: 415-722-6249; email@example.com
Deed in Lieu of Foreclosure
Rent it out
LAW AGAINST SHORT SALE DEFICIENCIES EXPANDED As quoted by California Association of Realtor News Letter
In a major victory for REALTORSÂ®, Governor Brown signed into law today a C.A.R.-sponsored bill, Senate Bill 458, prohibiting a deficiency after a short sale for one-to-four residential units, regardless of whether the lender is a senior or junior lienholder. Effective immediately for transactions closing escrow from this day forward, both senior and junior lienholders cannot require a borrower to owe or pay for a deficiency in a short sale. This law also prohibits any deficiency judgment to be requested or rendered for senior or junior liens after a short sale of one-to-four residential units. Any purported waiver of this rule shall be void and against public policy.
Although a lender cannot require a borrower to pay any additional compensation in exchange for a short sale approval, the new law does not prohibit a borrower from voluntarily offering a monetary contribution to a lender in hopes of obtaining a short sale. A lender is also permitted under the new law to negotiate for a contribution from someone other than the borrower, such as other lenders, agents, relatives, and the like.
Exceptions to the new law include a lender seeking damages for a borrowerâ€™s fraud or waste; a borrower that is a corporation, LLC, limited partnership, or political subdivision of the state; a lien secured by a bond as specified; a public utility lien; and additional rules apply if a note is cross-collateralized by more than one property.
This law is fully set forth as Senate Bill 458 (Corbett) at http://www.leginfo.ca.gov.
Meet with a local agent who is experienced with distressed sales. They have Attorney, CPA, resources to help you make an informed decision specific to your situation.
All the best to you.