A buddy of mine is a contractor who is experiencing a serious slow right now with work. He owns two homes, one is his live in house and the other is a rental. I know years ago when the market crashed people were buying new homes and letting the other go into forclosure. He is not at that point yet, but keeping the roof over his family head is his priority. I know there was some laws passed when people were letting there houses go. Does anyone know the risks if were to let his rental property go. He has tried to sell, but has had no luck.
He's pretty much screwed unless he can sell the rental. The bank will go after him on his other home. If he has a second he most likely signed a release to allow the bank to go after a deficiency judgment. The BK laws made it a lot harder to walk without paying something back. If he did a stated income (liar loan) and embellished his income he now has a problem with committing mortgage fraud.
He's pretty much screwed unless he can sell the rental. The bank will go after him on his other home. If he has a second he most likely signed a release to allow the bank to go after a deficiency judgment. The BK laws made it a lot harder to walk without paying something back. If he did a stated income (liar loan) and embellished his income he now has a problem with committing mortgage fraud.
That is what I thought. Just wanted to make sure.
He better start getting rid of stuff. At least he owns a few items that will mabey float him long enough to get back on top.
ok soo what happens if you only own 1 home and you have to let it go to forecloser? and that at the time of the loan was taken out and you stated your income ,was in fact correct , but however the mortgage co that was working on your loan took several months to complete the process , and in that time you got laid off work for a few months, and you just cant recover and the home is now a rental ,and you are also trying to sell it , but just dont care if you lose it .... :idea:
That is what I thought. Just wanted to make sure.
He better start getting rid of stuff. At least he owns a few items that will mabey float him long enough to get back on top.
T.O.P. There used to be a section in the classified section that was primarily TOP. Meaning someone step in here and take over my payments. I get nothing, you just assume the loan balance with zero down.....These ads were common in the non metro areas, where people were honest enough to want to live up to their obligations, but couldn't. Is he willing to just let it go to someone that can make the payments? Kinda like free equity, come and get it....Action in this direction MIGHT save his other house.........MP
If, If's and But's were candy and nut's everyday would be christmas.
The whole industry is preparing for a BIG influx of short sales, foreclosures and a big fat mess. I just went to a 3 hr. meeting on this subject on Tuesday. With the new BK laws and so many 2nd mortgages things will get rather sticky.
I am not a lawyer, I just play one on TV so don't quote me on all this.
It pretty much depends on the loan documents. California is a one action state. Generally, that means that a bank can either foreclose on the property or sue personally. They can't do both and they generally just foreclose. When you sign a loan, you are not personally the guarantor. The Deed of Trust is the guarantor, unless there is wording giving up the one action right where you can be personally responsible for any collateral deficiency.
California does have laws protecting people from negative equity. Hopefully the mortgage company doesn't have a loophole in their favor.
California is a one-action state and effectively, there are no deficiency judgments/actions. That's why it's ripe for crashing - people can literally walk away from houses without deficiency judgments.
The lender will most likely use a non-judicial foreclosure (not having to sue in court), which results in simply a foreclosure, no deficiency judgment, no money due and owing. Or they can choose a judicial forecloure - which they won't since the cost is too great. Thus the term "one action" they can only choose one method, but not both.
Your frind can short sale it and needs to speak with Locogringo or HolyMoly(?).
What about "selling" his live in home to his parents or children? Could the bank still come after it if they forclose on the rental?
The bank will not come after him. A foreclosure is a foreclosure in Cali - it will tank his credit though.
Tell your friend whatever he does, he should do it quick. Number uno mistake is people wait too long. Once a Notice of Default is filed, it really doesn't matter if the porperty is actual;l;y taken back by the bank. Even if he was to work it out, after the NOD was filed, it really wouldn't matter from acredit risk/scoring position.
If he is out of work then he would probably meet the new Chap 7 BK guidelines - but the trustee would take the rentals anyways and sell them to satisfy other creditors.
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