Walking away from our mortgage

[rtalbott73]

My jurisdiction is: California

Due to extenuating circumstances, my wife and I have decided to walk away from our home and let the mortgage fall into foreclosure. We have already modified our loan once, and have found ourselves two months behind again. We have decided to save the money we would be paying on our mortgage and use it to move into a much more affordable rental home. My question is, what are the ramifications of doing this? Can our lender come after us for the balance if they sell our home for less than we owe on the mortgage? Are there any other future pitfalls we can expect by doing this? Any advice we can get would be greatly appreciated.

 

[FlaRiptide]

In California all purchase-money loans on a one- to four-unit residential dwelling are exempt from deficiency judgments.

Hard-money loans in California -- loans taken out after the home was purchased through a refinance or second mortgage -- can be subject to a deficiency judgment under the following conditions:


•The lender forecloses under judicial proceedings (California Code Civil. Proc. § 726).

Also, have you investigated a short sale?

 

[rtalbott73]

Yes, we've looked into the short sale option. The area we live in is very rural and there are serious infrastructure issues in the housing development. A significant number of homes in our area are on the market, and many of them have been that way for some time. Nobody wants to buy here. Our biggest problem is that most of the homes here are valued at less than people owe on them. Since we refinanced a few years ago, I guess we should expect to be on the hook for the balance of the loan if the lender manages to sell the property. Thanks for your reply.

 

[Theresagail]

You wont be on the hook if you file bankruptcy 7 This may be the option you might want to think about