Short Sale, Foreclosure and Strategic Default


Wednesday, August 8, 2007

antideficiency, recourse and non recourse loans

Many of the questions I have been getting lately come from people with a first and a second loan. The second is usually very underwater and the question is - will the bank come after me. So in with respect to this scenario lets answer the question.

Answer - it depends.

Purchase money loans were once characterized as loans for the seller of the property. California extended the law to third parties who provided loaned funds to the buyer to purchase the property from the seller.

California Code of Civil procedure section 580b in general stands for the fact the buyer is protected from deficiency judgments after foreclosure from the seller of the property. A buyer would also be protected from third parties who provided funds for the purchase of the property.

For the purposes of this discussion please remember that lenders can and do attempt to get around the 580b protection by arguing the transaction was not a standard transaction. (which is why I have all the disclaimers at the bottom of the page about having your facts reviewed by licensed attorney.)


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