if you foreclose on rental property, can the banks come after your primary residance?

Asked by Carolyn, Riverside, CA Sun Mar 1, 2009

Have two homes. One is rental, one is primary. If we lose rental to foreclosure, can the banks come after our primary residence?

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Richard Alan…, , Riverside County, CA
Fri Mar 12, 2010
There are so many variables to answering this question. How you took title, the paperwork you signed and the fact that anyone can sue anybody which in this case gives them a reason to come after you. Remember, nowadays, the banks are recovering some of their losses by selling out to collection agencies and making deals with attorneys who sue people for a percentage of the gain. Harrasment usually wears you down to the point where you either give in or make a mistake. You need to plan for the worse and hope for the best. If you are not up to it, hire help right away. Sometimes the things that you have to do have to be done right away and you do not want to find out about them at the last minute. As soon as you get educated here, the fear will go away.
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Steven Ornel…, Agent, Fremont, CA
Sun Mar 1, 2009
Hi Carolyn, I'm not a lawyer, nor am I aware of the details of your circumstances; however, my understanding is as follows:

There a number of ways a lender may or may not be able to go after personal assets via a deficiency judgment after a foreclosure, but it makes a difference on how the property is foreclosed.

For a Non-owner occupied rental where:

1) A lender made a purchase money (recourse) loan, then a deficiency judgment can be attempted if a judicial foreclosure was used. This is not allowed under a trustee sale foreclosure.

2) A Seller financed a purchase money loan, no deficiency judgment can be attempted (non-recourse loan).

3) You as the owner of the property, refinanced the property (recourse loan), then a deficiency judgment can be attempted if a judicial foreclosure was used. This is not allowed under a trustee sale foreclosure.

In any case, you situation should be reviewed by a RE Lawyer to make sure.

You may also want to review questions 4 thru 6 of this document:
http://sbaor.affiniscape.com/displaycommon.cfm?an=1&suba…

Best Regards, Steve
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Jane Grant, Agent, Aguanga, CA
Sun Mar 1, 2009
Carolyn, This is a question for a Real Estate Attorney. I have had experience with Mark Mellor in Riverside. Here is the link to his website. Good luck! http://www.mellorlawfirm.com/CM/Custom/Attorneys.asp
Web Reference:  http://soreal.biz
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