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Posted by Don Lessbey on August 04, 2006 at 07:06:15:
In Reply to: Re: CA Foreclosure-Deficiency judgement posted by Jim V on August 03, 2006 at 23:59:40:
But will I be liable for any loss to the bank? Or do they just use the home for collateral? I hate to ruin my good credit, lose the home, but I feel there is no other choice with the market being raked over and my LTV% being so high. I know it will haunt my credit for 7-10 years, I just dont want to have owe on top of it.
: It's going to be looked a litle more closely because a two month old loan doesn't normally go through foreclosure. If the divorce was initiated after the re-fi, that's an obvious reason why payments can't be made. But, if the divorce isn't final, then child/spousal support payments aren't finalized which means the lender will want their payments. Somewhat Catch-22.
CA doesn't allow a lender to use the trustee sale process, which is reasonably quick and doesn't incur a lot of costs, and also seek a deficiency judgment. To obtain a deficiency, the lender would have to pursue judicial foreclosure which is rarely exercised.
Hope that helps.
: I just re-fied 2 months ago and now im going through a divorce, and there is no/little equity left in the home to try and sell it. I cant afford the payment and child/spousal support, so I want to turn the home back to the bank. Im worried that they will try and get a deficiency judgment against me. Is this possible? Or will they just take the home and it will just ruin my credit? I want to work with the bank, but I dont want to owe anything after the fact if I let it go. What are the financial risks here?
