We created this chart to help our clients quickly determine whether they need to worry about a deficiency judgment in California for a foreclosure or short sale. However, be sure to check with your attorney for specifics on your approval letter and personal liability. These are simply "rules of thumb" and not to be taken as legal advice.
The key is whether the loan was original purchase money or not.
|
|
Non-judicial Foreclosure |
Short Sale * |
|
Purchase Money - 1st Lien Owner Occupied, 1 - 4 units |
No |
Yes * |
|
Purchase Money - 2nd Lien Owner Occupied, 1 - 4 units |
No |
Yes * |
|
Non purchase Money - 1st Lien Re-finances, Vacation, Investment Property |
No (for lender who forecloses under "single action" rule) |
Yes * |
|
Non purchase Money - 2nd Lien Vacation, Investment Property |
Yes |
Yes * |
* If possible, attempt to get the bank to accept "payment in full without pursuit of any deficiency judgment" during your short sale negotiation. This may require a cash contribution, but it's usually just a fraction of the entire debts.
* Also, California Senate Bill 1178 may pass, which will extend anti-deficiency to non-cash out re-finances, as well as Purchase Money ... but don't count on this now and definitely check the effective dates when it does.
Nancy Moeller, CPA, Real Estate Broker
Seven Gables Real Estate
License #01727426
www.TheOCExperts.com
www.OCMarketUpdate.com (blog)
Direct: 714 276-7006
Fax: 714 917-2293
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