I am a Contra Costa County short sale attorney and a real estate broker. Many people in California today are faced with the possibility of a foreclosure and/or a short sale and don't understand the process and consequences.
With my wife, who is also a broker, we have conducted many successful short sales and have also recommended foreclosures when a short sale was not beneficial to the client. At the very least, as a real estate attorney, I can provide information and hopefully comfort to those going through this traumatic experience.
Martinez, California, Foreclosure and Short Sale Attorney
A foreclosure is when a bank takes over your home when you have not been paying the mortgage. (A home is described as one-to-four residential units.) There are two main types of foreclosures. One is what is called a judicial foreclosure, which is when the bank takes you to court. In this kind of foreclosure, the bank will try to recoup any losses it might incur if the mortgage is more than the value of the home. In California, a judicial foreclosure is rarely used because it takes more time and is more expensive than the non-judicial foreclosure. The second type of foreclosure is the non-judicial foreclosure. Here the bank closes under the deed of trust, and the bank cannot come after the homeowner if the bank has suffered a loss - that is, the mortgage is greater than the value of the home. Non-judicial foreclosures are by far the most common way that banks foreclose in California. The one action rule (CCP 726) states that a bank can foreclose either judicially or non-judicially, but not both. If the bank forecloses non-judicially, then it cannot seek what is called a deficiency judgment - that is money from the homeowner. CCP 580(d).
The definition of purchase money is money that was used to buy the home. If you refinance a home, then that money is no longer purchase money. If you take out a second mortgage to refurbish your home or to buy a car, then that money is not purchase money. Purchase money is only money that was originally used to buy the home. Banks cannot seek a deficiency judgment if there is a foreclosure on purchase money (see CCP 580(b)).
A major problem with having one's home foreclosed is that it greatly harms the homeowner's credit, generally for seven years. This may affect one's ability to get a job, to rent another place, buy another home or, if one does get a credit card, one might have to pay a higher interest rate. Foreclosures effectively kill one's credit for seven years, and if you can avoid it, the homeowner should try to do so.
One way of avoiding a foreclosure is through a short sale. A short sale is a sale for a price that is less than the mortgage. The homeowner sells to another person but has the bank that holds the mortgage approve the sale. Most banks prefer short sales over foreclosures and have become more cooperative.
Free Consultation With a Concord and Walnut Creek, California, Real Estate Lawyer
The foreclosure and short sale process can be fraught with dangers, as the laws and process are daunting. I give a free 30-minute consultation to see if I can help. Both my wife and I have a great deal of experience in working with banks and other attorneys to get you the best result possible. Call 888-335-9597 toll free or contact my firm online to schedule an appointment with a Martinez, California, foreclosure lawyer.