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I completely remoleded the home I purchased. Started with a gutted house and did it all. I was layed off and I can't afford the house anymore. I'm considering stripping the house of everything I put in it, doors, appliances, electrical, surround sound, toliets, sinks, cabinets, trim and molding and all fixtures. Putting it all in storage and walking away. A short sale wouldn't work in this scenario, right? At least I get my stuff. I guess my question is, can I be sued by the bank? Because if they truely won't work with me on the loan, they're going to get a shell of a house back. They're get back what I bought.
you can't be sued in CA because mortgages are "non recourse". The maximum they can do to you is take back the house, that is the legal limit in California.
If you choose to do it that way, be sure to secure a rental home first, before your credit is ruined by the foreclosure. I'm sorry you're in this situation.
Hmmm, not sure of the exact law but once you install them they become fixtures - part of the real estate. Thus, you aren't just walking away and causing a legal credit issue, but now you may very well create a criminal issue by stripping the house. Banks can pursue and prosecute criminally in those cases. Don't worry about being sued, worry about being put in jail when you do this.
It may not sound right, but it's (or may be, look for other responses) the law.
Hmmm, not sure of the exact law but once you install them they become fixtures - part of the real estate. Thus, you aren't just walking away and causing a legal credit issue, but now you may very well create a criminal issue by stripping the house. Banks can pursue and prosecute criminally in those cases. Don't worry about being sued, worry about being put in jail when you do this.
It may not sound right, but it's (or may be, look for other responses) the law.
....but what if no one that matters except the op know that these things were installed? .....if there is no legal record of these items being installed.
I completely remoleded the home I purchased. Started with a gutted house and did it all. I was layed off and I can't afford the house anymore. I'm considering stripping the house of everything I put in it, doors, appliances, electrical, surround sound, toliets, sinks, cabinets, trim and molding and all fixtures. Putting it all in storage and walking away. A short sale wouldn't work in this scenario, right? At least I get my stuff. I guess my question is, can I be sued by the bank? Because if they truely won't work with me on the loan, they're going to get a shell of a house back. They're get back what I bought.
Hey CA
I work with your type of scenario everyday. Let me tell you the real story........
Here's what can happen - if you walk away and let the house go into forecloser, that forecloser can be listed on your credit report and will be around many years to haunt you (ten years). Not to mention your score taking a noise drive 200 to 400 points (as in a bug hitting your windshield - "Splat").
Putting Pun aside - you need to get serious. What you do today, will affect who and what you become tomorrow.
California is best known as a non recourse loan state that makes it hard for lenders to sue, if a bank wants it's money they will get it. When you had your closing on the property - you signed 50+ pages, you probably signed a page giving the bank a right to take action against you. So you walk away and let the bank take back the property. The bank is going to hold on to it until they sell. They will probably sell it at a loss (short sale). You're talking about stripping the property - when they do sell it, the sales price will have to be really low. You will end up getting brunt later on.
One of two things can to happen
- You could get hit with a deficiency judgment 4 to 5 years down the road, and will have to file bankruptcy in order to save personal property. The judgment will be the difference between what you owe and what they sell. I have read posts from homeowners - where debt collectors actual stripped houses of all belongings, in order to satisfy a deficiency judgment from a loan years before.
or
- The actual loss they encounter between what it was sold for and what you owed. The difference will be reported as taxable income and the bank will send you a 1099. Say you owed $400k, it was sold for $100k = 1099 reporting $300k you get taxed on. Imagine getting taxed on $300k - now you got the IRS going after you. However part of the Obama plan - right now they are waving that in an attempt to simulate the economy. Chances are 2 or 3 years down the road the plan will not be around.
Note on the above bank options - the bank cannot do both at the same time, only one.
California is a non judicial state - meaning your lender does not have to go through the courts in order to foreclose and evict you from the house.
You have 2 options - but first you have to ask yourself do you want to keep the property, or do you want to lose it. Either way you need to have a legal representative, it might cost you a few bucks now, but it will save you big bucks later on.
One option is getting a loan modification, to have the payment reduced to 31% of your income (depending on the lender). I recommend having a legal representative helping you with this. Doing it yourself - your lender will benefit. Having a legal representative, you will benefit from the modification.
Your other option is the have an attorney draft the documents for a deed in lieu. ( Do not let the bank draft the documents). There needs to be a clause written protecting you from any loan recourse after you leave the property (even if CA is a non recourse state - these programs might not be around in a few years as the ecomony picks up). Part of this process is an actual short sale done by the lender. They will attempt to sell the property before they accept the deed. This takes on average 4 months - meaning this could buy you a little time.
Last edited by Green Irish Eyes; 12-16-2009 at 07:37 PM..
Reason: You also cannot solicit business in any way.
Walk away - your credit will be messed up for quite some time - but banks are not coming after debtors (besides I think there are some real equity arguments for debtors if they do). As far as the fixtures - if you dont destroy the house - how would they know. In SFl there are people who havent paid mortages for almost 2 years and still havent been served with foreclosure papers. This is your situation to resolve - do what is best for you and your family and ignore the rest.
....but what if no one that matters except the op know that these things were installed? .....if there is no legal record of these items being installed.
I think it would be obvious if doors and light fixtures, toilets, etc. were removed and the house was left as a shell. The OP indicated that they "gutted" the place and would take "everything I put in it, doors, appliances, electrical, surround sound, toliets, sinks, cabinets, trim and molding and all fixtures."
Ripping out electrical and removing toilets and sinks would essentially destroy the home, no? I hope some of the agents that frequent this board and MaM post in this thread because I'd be interested to know what the ramifications of doing that are.
Actually I hope the bank can somehow file criminal charges. You know, its the banks fault that you lost your job, probably spent too much remodeling and didn't have the forsight to save 6 months of living expenses. It will do you a lot of good to go to the trouble of destroying a home, hauling everything to storage, then paying storage fees just so "you can get back at the bank". real smart
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