This is an educational article about the current financial crisis and whether it is wise to "walk away" from your mortgage.
If you live in a state that has consumer protection statutes known as "anti - deficiency" statutes then you will be able to "walk away" from your home should you not be able or willing to continue making payments on it. Such statutes are enacted to prevent a homeowner from being sued by his lender should the homeowner be unwilling or unable to make his home loan payments.
In many states, some form of consumer protection has been enacted by the state legislature which prevents banks from suing homeowners for deficiencies. These laws typically apply to single family owner occupied residences.
In California, a strategic default is possible because of enactment of Code of Civil Procedure section 580b. This statute which prohibits a personal judgment against the debtor is set forth below:
"No deficiency judgment shall lie . . . . . for failure of the purchaser to complete his or her contract of sale, or under a deed of trust or mortgage given to the vendor to secure payment of the balance of the purchase price . . . . .or under a deed of trust or mortgage on a dwelling for not more than four families given to a lender to secure repayment of a loan which was in fact used to pay all or part of the purchase price of that dwelling occupied, entirely or in part, by the purchaser."
What this means in California, is that a homeowner who gets a loan the purpose of which was to "purchase" his or her house can not be sued by his bank on the "purchase money" loan. If, however, there was a refinance or a loan placed on the house after the purchase the homeowner would be wise to consult with a California real estate lawyer as there a very real possibility that the bank can and will sue for an unpaid non - purchase money loan.
It is important to note that in California, like most states that have such legislation, the anti - deficiency statutes apply to a "dwelling of not more than four families" which typically means a single family residence. Although in California it also applies to up to four unit buildings, so long as you live in one of the units.
More information on this subject can be found on the website http://www.palmspringslitigationattorney.com
While this type of statute has been adopted in many states not all states have such consumer protection statutes and you should check with an attorney in your state to find out whether or not it applies to you.
In sum, in states with consumer protection legislation described herein, you can safely engage in a strategic default without fear of being sued by your lender.
After making the determination, that you are in an anti - deficiency state a strategic default is up to you.
Strategic defaults are not without consequences, however, to credit. It is always best to evaluate all factors and to seek legal advice from a real estate attorney in your state.
This is an article by attorney Mitchell Reed Sussman. Mitchell is a California real estate attorney specializing in real estate, foreclosure and bankruptcy. His website is http://www.palmspringslitigationattorney.com
If you live in a state that has consumer protection statutes known as "anti - deficiency" statutes then you will be able to "walk away" from your home should you not be able or willing to continue making payments on it. Such statutes are enacted to prevent a homeowner from being sued by his lender should the homeowner be unwilling or unable to make his home loan payments.
In many states, some form of consumer protection has been enacted by the state legislature which prevents banks from suing homeowners for deficiencies. These laws typically apply to single family owner occupied residences.
In California, a strategic default is possible because of enactment of Code of Civil Procedure section 580b. This statute which prohibits a personal judgment against the debtor is set forth below:
"No deficiency judgment shall lie . . . . . for failure of the purchaser to complete his or her contract of sale, or under a deed of trust or mortgage given to the vendor to secure payment of the balance of the purchase price . . . . .or under a deed of trust or mortgage on a dwelling for not more than four families given to a lender to secure repayment of a loan which was in fact used to pay all or part of the purchase price of that dwelling occupied, entirely or in part, by the purchaser."
What this means in California, is that a homeowner who gets a loan the purpose of which was to "purchase" his or her house can not be sued by his bank on the "purchase money" loan. If, however, there was a refinance or a loan placed on the house after the purchase the homeowner would be wise to consult with a California real estate lawyer as there a very real possibility that the bank can and will sue for an unpaid non - purchase money loan.
It is important to note that in California, like most states that have such legislation, the anti - deficiency statutes apply to a "dwelling of not more than four families" which typically means a single family residence. Although in California it also applies to up to four unit buildings, so long as you live in one of the units.
More information on this subject can be found on the website http://www.palmspringslitigationattorney.com
While this type of statute has been adopted in many states not all states have such consumer protection statutes and you should check with an attorney in your state to find out whether or not it applies to you.
In sum, in states with consumer protection legislation described herein, you can safely engage in a strategic default without fear of being sued by your lender.
After making the determination, that you are in an anti - deficiency state a strategic default is up to you.
Strategic defaults are not without consequences, however, to credit. It is always best to evaluate all factors and to seek legal advice from a real estate attorney in your state.
This is an article by attorney Mitchell Reed Sussman. Mitchell is a California real estate attorney specializing in real estate, foreclosure and bankruptcy. His website is http://www.palmspringslitigationattorney.com
About the Author:
Looking to find the best deal attorney to help you with your strategic default, then visit www.palmspringslitigationattorney.com to find the best advice on strategic real estate defaults.
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