Legal Question in Real Estate Law in California
Cash out refi, foreclosure
I paid $182k for my house, refi'd at 235k with cash out. Now, it's worth maybe 160k. If I walked away or was foreclosed on, would I be expected to repay the cash out portion, over the purchase amount? Thanks.
3 Answers from Attorneys
Re: Cash out refi, foreclosure
The answer depends upon a number of factors. First, I assume from the description that the refinance is one loan, that being the first priority mortgage on your property. If you have two mortgages, then the following discussion is inapplicable. If the lender chooses non-judicial foreclosure (which 99% of residential foreclosing lenders choose), then you are protected from a deficiency (difference between what you owe and what the bank recovers at the foreclosure sale) by the "one-action rule." If they chose to foreclose judicially, you could be liable for a deficiency, not just what you took out in cash. You need to review all of the specifics of this matter with an attorney to truly gauge what your potential exposure is.
*Due to the limitations of the LawGuru Forums, The Gibbs Law Firm, APC's (the "Firm") participation in responding to questions posted herein does not constitute legal advice, nor legal representation of the person or entity posting a question. No Attorney/Client relationship is or shall be construed to be created hereby. The information provided is general and requires that the poster obtain specific legal advice from an attorney. The poster shall not rely upon the information provided herein as legal advice nor as the basis for making any decisions of legal consequence.
Re: Cash out refi, foreclosure
The answer depends upon a number of factors. First, I assume from the description that the refinance is one loan, that being the first priority mortgage on your property. If you have two mortgages, then the following discussion is inapplicable. If the lender chooses non-judicial foreclosure (which 99% of residential foreclosing lenders choose), then you are protected from a deficiency (difference between what you owe and what the bank recovers at the foreclosure sale) by the "one-action rule." If they chose to foreclose judicially, you could be liable for a deficiency, not just what you took out in cash. You need to review all of the specifics of this matter with an attorney to truly gauge what your potential exposure is.
*Due to the limitations of the LawGuru Forums, The Gibbs Law Firm, APC's (the "Firm") participation in responding to questions posted herein does not constitute legal advice, nor legal representation of the person or entity posting a question. No Attorney/Client relationship is or shall be construed to be created hereby. The information provided is general and requires that the poster obtain specific legal advice from an attorney. The poster shall not rely upon the information provided herein as legal advice nor as the basis for making any decisions of legal consequence.
Re: Cash out refi, foreclosure
You can be sued by the refi lender for any deficiency after repo sale. Cut a deal with the lender now, not later, for short sale or deed in lieu, or renegotiated loan. Feel free to contact me for legal help in doing so if serious.
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