Home under Water


I own a home in CA. I bought for $561,000 and now it is $230,000. I put in 5% down when buying and I have two loans one is $449,000 and the other is $83,000. I stopped making payment for both of them since Sep 09. I have submitted the paperwork for loan mod. They started my trial period from Feb 10 for the reduced money. Meanwhile my 2nd loan is been charged off by Wells Fargo Home Equity Line of Credit department. I still continue making payment for my 1st. It seems they will take more time to approve my loan modification. I am undergoing stress due to this. If I go for a Short Sale, what are the implications? Since I got these loans towards the purchase money, they cannot come after me correct? Because I am in a non-recourse state. Please advice.

You signed a note to the bank. You are obligated to pay it. Even though the 2nd bank is out of the picture they still have the right to come after you for their loan. If you don’t have other assets or major income they probably won’t come after you either way. It would be a waste of their time.

I have heard that Purchase Money Mortgages, both First and Second taken at the time of purchase, cannot be pursued for deficiency in CA. However, if you refinanced after the original purchase then the replacement notes are collectable for a deficiency.
Go ask a Ca attorney. Don’t rely on the blind leading the blind. Geez, you can afford a 500K Payment?, then go get a 1/2 hour legal consult to ask your local questions.
I think you should stop paying on your notes and go rent the house across the street for half the monthly payment…Have some money left over everymonth…just my opinion.

I also heard today that CA is a non recourse state (like my state, AZ)

I am asking myself questions you should ask yourself:

What about taxes on the “gain” you realize by forclosing? (amount written off)

How long does forclosure REALLY stay on your record?

How many points does forclosure REALLY take off your credit score?

Hi its very important that you complete the formalities from the first bank and then only you go for another else you can face problem.