Original Mortage was 80/20 – the 1st was sold off… if I foreclose do the same rules apply to me under anti-deficiancy laws in California?

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Original Mortage was 80/20 – the 1st was sold off… if I foreclose do the same rules apply to me under anti-deficiancy laws in California?

Both Loans on the property funded at the same time and were used as purchase money. The first was sold off to Indymac bank and the second is still held by the same lender as the time of purchase. If I had no other option but foreclosure, will the lender have any recourse or will I be protected under california law? I just want to ensure if I foreclose in a non-judical way that I am safe from anyone coming after me for the remainder.

Asked on May 29, 2009 under Real Estate Law, California

Answers:

MD, Member, California Bar / FreeAdvice Contributing Attorney

Answered 14 years ago | Contributor

It depends.  Anyone can sue for the deficiency.  The advice you seek must be determined based on a number of factors, including what you mean by if you foreclose.  You don't foreclose, you are foreclosed on. 

Anti-deficiency laws only really kick in on a purchase money loan, not on a refinance.  The fact you have have a second loan may make the anti-deficiency law null and void for you, so you can be sued for the deficiency.

 

You may have other options, like modification/workout or deed in lieu.

Contact the following:

1. California Dept of Financial Institutions

2. A California Real Estate/Bankruptcy Attorney.  Try www.attorneypages.com and then check his or her disciplinary record under attorney search at www.calbar.ca.gov.


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