Legal Question in Real Estate Law in California

Re: Foreclosure consequence

Howdy:

I've been out of California for a while, but my recollection is that deficiency judgments aren't allowed. So, if the property forecloses, you walk away and the lenders get whatever they can. I'll rely on follow up answers to correct me if needed.

If your lender is open to a short sale, they may also be open to a renegotiation of the loan. It sounds like you have a second. Unless that loan forecloses first and takes over the first, they're basically screwed. (That's actually the legal term!)

If you can open negotiations prior to a notice of default, but certainly before a trustee's sale, we might be able to work with the lenders to restructure the debt and make it manageable for you and keep the house from becoming an REO for them.

In the past, it's been a tough sell, which has been a ridiculous position for the lenders. It's always been in their best interest to negotiate rather than take the property back. In this economy, they're much more flexible.

Good luck.

rkr