What happens legally to someone who walks away from their home?

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What happens legally to someone who walks away from their home?

Asked on August 2, 2011 California

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

In California, when a property owner who has a trust deed (mortgage) recorded upon his or her property walks away from the home and ceases making mortgage payments for it, the lender who has the recorded trust deed forecloses upon the property.

The property is then auctioned off at bid and legal title to it is then placed in the name of the new owner. This could be the beneficiary of the foreclosed trust deed or the new buyer at auction.

At best, the former property owner gets a negative credit rating for losing the property in foreclosure. At worst, depending upon whether the loan is "purchase money" or not and if not "purchase money". If there was a nonjudicial versus judicial foreclosure, the former property owner could be responsible for a deficiency judgment on the sale. A deficiency judgment is the amount what the property was sold for versus the amount owed upon the foreclosed loan.


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