Foreclosure?

Question:

What happens to me if I walk away from my $353,000 loan because of a 9% adjustable rate mortgage. My prepay penalty is $6500 until October. Then it drops to $3500. My second is $47,000 at a different bank. I am upside down. Does California have a special law where this does not hurt you to walk away? I am only able to make the minimum payment of $1600. The real payment is $3229. Since I cannot make the payment, it is added to my principle every month. So far it has added $27,000 to my loan. What should I do?

they will come after you

SELL THE HOUSE!!! This way, the forclosure does not appear on your credit report, and no one can sue you for the debt.

California has no laws allowing you to just "walk away" from a debt. You borrowed the mney, you owe the money back. Why on earth did you borrow so much if you can't afford it?

You need to sell this house and live within your means.

Damn, that's a huge mortgage. Try to sell the house as quick as possible!! Good Luck!

Contrary to what you have read, California DOES have a law call Anti Deficiency law. If you borrow money to buy a home and the loan is secured with a trust deed, as 99.99 percent are, if you just walk away from the home and loan, the lender CAN NOT come after you for any money if the house does not sell for the loan amount.

Yes, your credit will take a hit. However your debt to the lender is canceled. This may not apply to your 2nd loan. The rules are complicated for a 2nd that was not used to buy the home.

There has been great appreciation in most California homes so you may have some equity. Sell the home and claim some of that money AND save your credit.

You could try doing a short sale with someone who would be willing to purchase the property for a reasonable amount. If you can't afford the property, the lenders may be willing to settle for less than the exact amount that they are owed.

I'm not aware of any special California law that would allow you to walk away from the property after voluntarily taking on these mortgages that you are unable to afford. You could try suing the lenders for fraudulent inducement of debt, meaning they made the loans knowing that you would not be able to repay them. Talk to an attorney about this, though, as it is probably not an easy case to prove.

In terms of getting out of the house, though, try the short sale. If that doesn't work, you can attempt to give the bank a deed in lieu of foreclosure and just transfer the property back to the bank with no further obligation on your part. This hurts your credit, but not as much as a regular foreclosure, at least.

Good luck.

ForeclosureFish
http://www.foreclosurefish.com/...

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