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Anyone familiar with the ridiculously convoluted laws on this matter?
My wife and I are looking to buy our first home soon and I'm doing some research on mortgage laws and all of that fun stuff. We live in a remote area of California where there is only one employing organization and the town's economy relies almost entirely on that one organization. If, hypothetically (I don't ever think this will happen, but it's best to prepare for the worst!), the organization were to leave town and the town's economy implodes, where do I stand on my mortgage? What options do I have?
My situation is a bit different than most peoples because if the worst were to happen, I would have no choice but to foreclose since nobody else would be here to buy the house! My biggest fear at this point is the ability for banks to levy bank accounts in the event of a foreclosure. I do not want them anywhere near my bank accounts...
Anyway, I've read that California is a non-judicial foreclosure state, which means the lenders cannot legally go after your finances, even if there is remaining debt after they sell the house. If this is true, I would be thrilled... although something tells me it's not this easy, which is why I'm posting this thread - to see if anyone can confirm this is true, and if there are any exceptions.
Anyway, I've read that California is a non-judicial foreclosure state, which means the lenders cannot legally go after your finances, even if there is remaining debt after they sell the house.
The word you are looking for is "non-recourse". In California, mortgage loans for the purchase of an owner-occupied house are non-recourse. However, if you refinance a mortgage, then it isn't non-recourse. Or might not be, as I think they were talking about changing the law.
Frankly if this truly is a situation where you'd be forced to abandon your legal obligation to repay the debt I would simply not buy there in the first place. I would expect the employer to provide housing as part of the employment. If the employer was unwilling to do that and you still wished to work there I would rent....
I suspect there is case law on folks attempting to sue an employer for "closing up shop" or ask for the court to cease foreclosure when a major employer leaves but I further suspect that courts have not sided with those that make such are arguement. I mean what about stuff like food, gasoline, healthcare , etc -- does the employer control all that too?
The word you are looking for is "non-recourse". In California, mortgage loans for the purchase of an owner-occupied house are non-recourse. However, if you refinance a mortgage, then it isn't non-recourse. Or might not be, as I think they were talking about changing the law.
California is a non-recourse state for purchase money loans so they could not sue you if it was a purchase loan. If you refinance they could potentially sue you if the loan isn't satisfied by the foreclosure sale of the house. But since lenders in California almost exclusively foreclose non-judicially with a trustee sale even if they have the right to sue because it is just quicker and cheaper for them you really have little chance of getting sued my the first mortgage if you took out a second there would be a chance they could sue. As far as owning taxes after a foreclosure with a purchase money loan since it is non-recourse their would be no money forgiven and no tax consequences. With a refinance you could potentially owe taxes because money would be considered forgiven.
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