What is a deficiency under CA laws? 8 Answers as of August 01, 2011

I filed for chapter 13 and have been reading about anti-deficiency laws may be applicable if I foreclose on my home. What is this?

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Janet A. Lawson Bankruptcy Attorney
Janet A. Lawson Bankruptcy Attorney | Janet Lawson
Purchase money loans are forgiven after foreclosure. Refinanced loans, or loans taken out after the home is purchased are not. If there is a balance left after the foreclosure, you owe it. In your chapter 13 case that balance would get paid along with the rest of your creditors and they will get what they get. The rest will be discharged.
Answer Applies to: California
Replied: 8/1/2011
Ursula G. Barrios Law
Ursula G. Barrios Law | Guillermo Machado
In general, on purchase money security interest (mortgages on your home), if you lose residence to foreclosure,you are not liable for deficiency owed (if any).
Answer Applies to: California
Replied: 7/28/2011
Carballo Law Offices
Carballo Law Offices | Tony E. Carballo
It means that in some cases the bank cannot collect the loss (the difference between the amount received at the foreclosure sale and what is actually owed). There is no deficiency owed when a bank forecloses by trustee's sale (which is how residential foreclosures are done in about 99.99% of the cases in California). The problem is with the second loans and other junior loans which do have the right to go after the person who owes the money on the second mortgage loan after the first mortgage forecloses (with an exception when it was a purchase money loan on the persons personal residence).
Answer Applies to: California
Replied: 7/28/2011
The Law Office of Mark J. Markus
The Law Office of Mark J. Markus | Mark Markus
They are laws that prevent an otherwise recourse loan from coming after you for a deficiency after sale of the property. In California, first mortgages are precluded by the anti-deficiency statute from being able to come after you for any deficiency on a principal residence in the event there is a deficiency after foreclosure or other sale.
Answer Applies to: California
Replied: 7/28/2011
Bankruptcy Law office of Bill Rubendall
Bankruptcy Law office of Bill Rubendall | William M. Rubendall
If your home is foreclosure will not usually owe a deficiency because of California law.
Answer Applies to: California
Replied: 7/28/2011
    Financial Relief Law Center
    Financial Relief Law Center | Mark Alonso
    Deficiency judgment occurs when you had a secured loan, such as a mortgage or auto payment, you default on the loan and property is repossessed or foreclosed upon. That lender can sometimes still have the authority to pursue a deficiency judgment against you for the unpaid part of the loan. In CA, if the mortgage is purchase money, then a deficiency judgment cannot be obtained. Furthermore, if a lender uses non judicial foreclosure to foreclose on the property then they cannot also pursue a deficiency judgment as well. If there are two mortgages on a property and only the first forecloses, then the second may be able to obtain a deficiency judgment because they weren't paid and they didn't foreclose. However, new changes in CA law as of recently and again this month have changed the code so that if a property is sold as a result of a short sale, whether non owner occupied or owner occupied property, neither mortgage lenders (not the first and on the second mortgage holder) can obtain a deficiency judgment. If you are in the middle of a chapter 13 bankruptcy, then it's probably the case that you are keeping your property, but I cannot be sure from the information provided below. As long as you still have your property and you are paying your mortgage(s), then you should be fine. If you have a second mortgage on your property and you're in a ch. 13 bankruptcy, I would hope you have considered the lien strip option (if your home is under water) or are otherwise resolving that debt.
    Answer Applies to: California
    Replied: 7/28/2011
    Dan Shay Law
    Dan Shay Law | Daniel Shay
    CA is an anti-deficiency state meaning if there is a foreclosure and the lender does not receive all their money from the sale, the Debtor is not liable so long as the loan is an original purchase money loan. If the loan was refinanced or is a HELOC the Debtor is liable if there is a deficiency after the foreclosure sale.
    Answer Applies to: California
    Replied: 7/28/2011
    Law Office of Harry L Styron
    Law Office of Harry L Styron | Harry L Styron
    In California, if the deed of trust on a your residence of 4 or less units is a purchase money lien (the original obligation by which you purchased your home) then if that deed of trust is foreclosed and the creditor sells the property for less than you borrowed, the creditor cannot sue you for the deficiency.
    Answer Applies to: California
    Replied: 7/28/2011
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