We have a house in CA and it is imminent that our house will go for a foreclosure. My concern is that will we have to pay the balance after our house sells for a lesser amount ? I have heard from various realtors that we will not have to pay, while others are saying that we will have to pay. What's going to happen ? Please give me all the details.
2007-11-04 05:18:02 · 6 answers · asked by Dan 2 in Business & Finance ➔ Renting & Real Estate
Banks almost never sue for deficiency judgments. They know homeowners don't have enough money after foreclosure to pay them. I wouldn't worry about it unless you have a lot of extra cash and assets.
2007-11-07 07:49:10 · answer #1 · answered by Anonymous · 0⤊ 0⤋
Dan it seems there are some different laws in your sunny state of California. So my best suggestion is to consult with an attorney. In some states the balance the lender is unable to recoup is then filed to the IRS on a 1099 form. Which in effect grosses up your income for that year. I have heard both some will and some won't. Best to check and be sure, so you aren't suprised down the road with a large tax bill.
2007-11-04 06:32:54 · answer #2 · answered by Alterfemego 7 · 0⤊ 0⤋
The Realtors are wrong.
When people have a foreclosure what usually happens is that they are forced into Chapter 7 bankruptcy right after that because the mortgage company will seek a deficiency judgement against you for the balance.
I cannot imagine any Realtor telling someone that.
2007-11-04 05:52:59 · answer #3 · answered by Expert8675309 7 · 0⤊ 1⤋
If the loan is on your home and the loan is NOT a refinance loan the house IS THE ONLY security for the loan in California. No matter what the house sells for, you WILL NOT owe the lender anything.
A home purchase money loan CAN NOT have a deficiency judgement in California.
2007-11-04 06:28:34 · answer #4 · answered by Anonymous · 0⤊ 0⤋
this is usually called a deficiency and your liability for it is covered by California law. Google will find the CA law for you.
2007-11-04 05:27:29 · answer #5 · answered by Spock (rhp) 7 · 0⤊ 0⤋
you are responsible for any balance. if you do not pay it, the bank can send you a 1099 for it. This way they get to write it off, and you get to pay income taxes on it as ordinary income.
2007-11-04 05:23:47 · answer #6 · answered by Rafael P 4 · 0⤊ 1⤋
call a lawyer for guidance
2007-11-04 05:25:17 · answer #7 · answered by Michael M 7 · 0⤊ 1⤋