Re: California Judicial/Non Judicial concern


Posted by dr on January 25, 2009 at 22:32:10:
In Reply to: Re: California Judicial/Non Judicial concern
Posted by dr on January 25, 2009 at 22:27:51:California Foreclosure Rules - What is the Purchase Money Rule?
In California the lender who loaned you the money to purchase your primary residence can only foreclose on your property. This means if the foreclosure sale does not pay all of the original loan used to purchase your property (purchase money loan), the lender cannot sue you for the unpaid balance.

This applies to second mortgages used in many 80/20 100% financing deals.

However if you refinance your original purchase money loan or loans this rule does not apply.

California Foreclosure Rules - What is the One Action Rule?
In California, a lender can only take one action against you - either a judicial foreclosure or a non-judicial foreclosure. If your property has only one mortgage the lender will in almost every case pursue a non-judicial foreclosure.

If the sale of the foreclosed property does not pay off the mortgage in full, the foreclosing lender cannot get the unpaid balance from you. By pursuing a non-judicial foreclosure the lender has used their "ONE ACTION".

If your property has a 2nd loan and the 1st lender pursues a non-judicial foreclosure and the sale of foreclosed property results in an unpaid balance to the 2nd lender, the 2nd lender can obtain a deficiency judgment for the unpaid balance because they have not had their ONE ACTION against you yet (with the exception of the Purchase Money rule).


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