Since the RE market in California has cooled I heard people can just walk away from their house if the price drops and there is nothing the loan companies can do. IE those people who put 0 down...
2006-07-25 09:08:44 · 11 answers · asked by unknow noob 1 in Business & Finance ➔ Renting & Real Estate
Well, the arguement I heard before was that since California's RE market has boomed so much in the past 3 years people were buying houses that they can't afford on 0% down and ARM. Because they can just walk away when they don't feel like keeping the house or the price doesn't go up anymore.
2006-07-25 09:24:30 · update #1
Sure, but forgiveness of debt is income in the IRS's eyes so be prepared to be shocked. Also your credit will be ruined for at least 10 years.
2006-07-25 09:12:49 · answer #1 · answered by parshooter 5 · 1⤊ 0⤋
Most loans in California, even government loans such as FHA, are non-recourse loans which means that they can't come after your other assets if you walk away from the house and it is foreclosed on. The bank or mortgage company can only come after the proceeds from the foreclosure sale.
However, there are a few finance companies and individual lenders that will require your personal assets and your other assets as collateral in addition to your house equity, for second and third mortgages.
2006-07-25 09:19:49 · answer #2 · answered by stocker 3 · 0⤊ 0⤋
I don't know about walking away but I have heard that some banks will require you to suddenly come up with the difference if the value drops! So if you paid 300,000 for the house and 1 year later the value drops to 260,000 they can require you to pay the loan down to meet the new value! So if you still owed 290,000 you would need to pay 30,000!
2006-07-25 09:47:11 · answer #3 · answered by nooodle_ninja 4 · 0⤊ 0⤋
Consider filing bankruptcy or returning the property in lieu of foreclosure. The lender may be what's known as "undersecured" (the loan is more than the house is worth). If you're in bankruptcy, normally you won't be liable for any deficiency (assuming California law permits it). I'd consult a bankruptcy lawyer ASAP. Go to this site to find a reputable and knowledgeable one in your area: www.nacba.org
2006-07-25 09:21:15 · answer #4 · answered by clcorwa 1 · 0⤊ 0⤋
sure you can walk away from your house, just like you can walk away from your wife, your kids, your dog, your car...its not illegal to walk away from anything unless it's a police officer and he's trying to arrest you. I think that one may be illegal. Since it's resisting arrest; however, if you do walk away from the other things you do pay a price. You walk away from your kids, they may never talk to you again, if you walk away from your wife, she may collect alimony and if you love her, she wont love you for walking away from her, if you walk away from your mortgage, you will get a foreclosure on your credit history and that will stay with you for about 7 years. So good luck getting into another house for the next 4-7 years with that on there. What bank would loan out money when there is proof that the person defaulted on their mortgage. Banks are big and wealthy because they know who to loan money to and who not to loan money to. Think about walking away from your mortgage long and hard before.
Good Luck!
2006-07-25 09:14:29 · answer #5 · answered by Bay Area Real Estate Realtors 2 · 0⤊ 0⤋
They can walk away if they want but they still have to pay the property tax and/or then wait for the house to be foreclosed on them. they will then have bad credit and not be able to re purchase a home.
2006-07-25 09:13:40 · answer #6 · answered by cherie 2 · 0⤊ 0⤋
Hi unknow,
This statement is not true.
If they decide to "walk away" they WILL face a foreclosure situation.
Once you sign on the dotted line, you are responsible regardless of the market climate. This is a nation wide fact.
~Trey
2006-07-25 09:22:58 · answer #7 · answered by ~Trey 3 · 0⤊ 0⤋
I don't know that. I do know the prices are sickening here. For a decent house (not a mansion) it's like $750,000!!!
2006-07-25 09:12:18 · answer #8 · answered by The Man In The Box 6 · 0⤊ 0⤋
It would be foolish to walk away..property will go back up in Ca.
2006-07-25 09:14:25 · answer #9 · answered by Anonymous · 0⤊ 0⤋
Common sense tells me no, why would you be able to?
2006-07-25 09:14:17 · answer #10 · answered by Phil My Crack In 4 · 0⤊ 0⤋