I have a forclosed property in California in Sept 2009, which I owed $370,000. Part of this is $150,000 that I pulled out after a refinance. The

Asked by Deljoe, 91911 Tue Jun 29, 2010

Property was sold for $320,00. Will the lender go after me in the future for the difference?. Deljoe SD

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Shel-lee Dav…, Agent, Rolling Hills Estates, CA
Wed Jun 30, 2010
My first answer is - it depends. My second answer is - this is a question that needs an attorney - since it is a legal question. I will share what I have been told, but I am just passing along information, not giving any legal advice. If you need a referral to a great attorney in the South Bay, let me know.

So here is what I have been told. When it comes to enforcing obligations secured by California real estate, California is a “single action” or “one-action” state. Civil Procedure Code Section 726(a) provides in part that “[t]here can be but one form of action for the recovery of any debt or the enforcement of any right secured by a mortgage upon real property.”

So, if you had one loan for the full $370,000 and the lender did a standard foreclosure under the terms of the Deed of Trust (ie a Trustee Sale/Action, not a judicial foreclosure), then they have exhausted their single action. They cannot come after you for a deficiency judgment. On the other hand, if you had two loans and it was the 1st TD lender that foreclosed, the holder of the 2nd can come after you. The foreclosure may have wiped out their security interest in your property, but it did not satisfy the note (your promise to pay).

This is why (1) it depends and (2) get legal advice specific to your situation. Again, you can contact me if you would like the names of some good attorneys who practice real estate law in LA County. Dare to Dream.

Shel-lee Davis, CDPE, SFR, QSC
Your Real Estate Consultant for Life
RE/MAX Palos Verdes Realty
http://shel-lee.listingbook.com
1 vote
Royal Real E…, , 90275
Wed Nov 17, 2010
Dear Dejjoe:

If you property has been foreclosed because you defaulted on your pament obligations. Lender cann't come back after you to obtain deficiency judgment against you, since, it was foreclosed non-judicially.

You can consult an attorney giving them full facts. So that you can have peace of mind. Wish you good luck.
0 votes
Thom Colby, Agent, Irvine, CA
Sun Oct 17, 2010
Deljoe,

Sounds like it's a Refinanced loan which makes it a RECOURSE Loan. There are many ways to interpret the latest laws and programs to deal with these issues but as others have said, you should contact your attorney and your CPA.

Best of luck,

Thom Colby
Broker / Owner & Certified HAFA Specialist
Thom Colby Properties
Newport Beach, CA
Moving Lives Forward (TM)
We NEVER DOUBLE-END Transactions in our Brokerage. There is NO benefit to the Seller or Buyer and only benefits the Agent. Also, NEVER use your RE Agent / Broker as your Lender or vice versa. Also, be careful when using Real Estate Broker-owned Escrow and Title Companies - they can be loads of trouble.
888-391-5245 Direct Cell
THOM@THOMCOLBY.COM
DRE# 01398570
0 votes
Ruth and Per…, Agent, Los Gatos, CA
Sat Oct 16, 2010
Hi Deljoe

Your agent should have pursued a discharge of debt then. Your bigger concern should be the IRS and past taxes and penalties owed. In time they will come knocking.

Clearly, the bank may have mailed a 1099 to your old address, which may or may not have been
forwarded to you or they may mail you a new one to your old address that could get returned.

Worst case if you cant pay get in touch with a bankruptcy attorney.

Read this blog below SB 1178 was vetoed setting the stage in the future for Banks to come after
past owners with :

http://www.trulia.com/blog/perry_mistry/2010/10/anti_deficie…

Good luck.
Perry
Web Reference:  http://www.ruthandperry.com
0 votes
Michael Magaw, Agent, Torrance, CA
Sat Oct 16, 2010
You really are asking the wrong crowd. Call an attorney.
0 votes
Vincent Vill…, Agent, Chula Vista, CA
Sat Oct 16, 2010
Talk to a good Real Estate Attorney, Real Estate agents like my self can attempt to answer that question but get all the facts together and speak to an attorney. Attempting to answer questions like this to a realtor will result in multiple differant answers.
0 votes
Kim & Kristi…, Agent, Santa Monica, CA
Thu Jul 1, 2010
Hello Deljoe:

The bank approval letter will determine what the lender is going to do now or in the future. Also, if your assest are more than you liabilites you are covered under the House Bill for distressed properties. As another agent said this could mean you are insolvent. A simple letter from your CPA can resolve this should the bank contact you at a later date.

The basic principle to remember is that there are many ways to respond should a lender contact you in the future. Also, should you be contacted never allow anyone to bully you into feeling bad.

Best,

Kristine :)
0 votes
Michael Magaw, Agent, Torrance, CA
Wed Jun 30, 2010
I agree with Anna, your question needs to be addresses by an attorney or CPA. I believe the insolvency test can protect you from owing taxes when debt is forgiven. I do not know if it applies to the lender having recourse on a defaulted non-purchase money loan. Cash-out Refi loans are exactly the types of loans that lender want to go after to recover their funds.
0 votes
Anna M Brocco, Agent, Williston Park, NY
Wed Jun 30, 2010
In order to best protect yourself you may wish to consult with an attorney who specializes in real estate; he/she will be your best source of advice as it relates to your specific situation.
0 votes
Sheyenne Sch…, Agent, Torrance, CA
Wed Jun 30, 2010
Hi...That depends. I have a CPA that specializes in short sale, foreclosure and deficit amounts being pursued by banks. She is an expert on this. You may have to show insolvency. Meaning your debts add up to more than your assets. If you are insolvent, they can't come after you. You can't get blood from a turnip.
Call me 310-429-4170 or email me shy@shysells.com thanks! Shy
Web Reference:  http://www.shysells.com
0 votes
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