Foreclosure in California>Question Details

T, Other/Just Looking in El G.H.E.K.O., Tucson,...

Are primary mortgages, in california, that have not been refinanced, recourse or non-recourse?

Asked by T, El G.H.E.K.O., Tucson, AZ Thu Sep 13, 2007

Most mortgage brokers cant give me a straight answer to this, which leads me to believe there is a very large elephant in the room. Any mortgage brokers or real estate attorneys out there care to attempt to answer, including your interpretation of "single action". What are the implications if the answer is non-recourse in the event of a major california real estate meltdown? THanks.

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California uses Trust Deeds (deed of trust), which are not exactly the same as a mortgage. This confuses many inexperienced mortgage brokers and Realtors. The following data is public information and directly from the CA Department of Real Estate. I believe this will answer your question:
In certain instances it may be desirable to file a lawsuit in a local superior court to foreclose on the Property (judicial foreclosure). When the beneficiary files a lawsuit against the trustor in a local superior court to judicially foreclose, the Property, unless the default is remedied (cured), will be ordered sold at a publicly held sale supervised by the court. The judicial action to foreclose is often more costly and will typically take more time to complete than the second method, which is a privately held public sale (non-judicial foreclosure).

In a non-judicial foreclosure, the trustee (under the power of sale clause contained in the deed of trust) may proceed with the foreclosure at your request and, unless the default is cured, sell the Property without court supervision. This privately held public sale procedure will usually take at least four months to complete. If the deed of trust does not contain a power of sale clause, your only option is to foreclose judicially. Most deeds of trust do include a power of sale clause.

One of the major differences between the two foreclosure methods is your right to obtain a deficiency judgment, which is available when the loan is a "non-purchase money" mortgage or deed of trust. If the Property is other than one to four residential units, or if it is one to four residential units and the borrower did not intend to occupy, your loan (as distinct from a seller "carry-back") would be "non-purchase money." When your loan is used to finance or refinance the equity of the Property (no sale transaction is involved), the loan is also "non-purchase money."

If your loan is "non-purchase money" and you determine the protective equity is insufficient to repay the entire amount owed by the borrower, including all of the fees, costs, and expenses of the foreclosure, you may want to consider a judicial foreclosure. Deficiency judgments are not available when the non-judicial foreclosure method is utilized. However, collateral actions (a separate judicial action) for fraud, waste, or malicious destruction of the Property may still be possible.

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0 votes Thank Flag Link Mon Oct 1, 2007
relative to residential real estate 1-4 units...purchase money mortgages are non recourse. the lenders were forced to accept this element of the deal when they got the right to foreclose non judicially by way of trustees sale. the non judicial method is far faster so they must give up the right to a deficiency judgement when they elect to do so.

they get to foreclose in 111 days...try that in a non trust deed state!
0 votes Thank Flag Link Thu Sep 13, 2007
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