What will happen if I default on a home loan? 5 Answers as of December 26, 2013

I have a home I cannot sell. I have never missed a mortgage payment and have pmi as part of impound payment. If I walk away from the house but continue to pay the impounds (tax insurance pmi), can the lender come after my assets except for the house which is the collateral on the loan?

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Danville Law Group | Scott Jordan
Is the property located in California? If it is, the bank will likely perform a no judicial foreclosure and they can only take the house. They cannot sue for the deficiencies. Also, if you stop paying the mortgage, other than insurance, why would you pay the pmi and property taxes?
Answer Applies to: California
Replied: 12/26/2013
The Law Office of Darren Aronow, PC
The Law Office of Darren Aronow, PC | Darren Aronow
Generally no, they only come after the collateral, but in NYS, they can come after you personally within 90 days after an auction sale. You may want to try to short sale the house.
Answer Applies to: New York
Replied: 12/26/2013
Law Offices of Linda Rose Fessler | Linda Fessler
Yes the lender can and will come after you for a deficiency judgement, that is the difference between what they sell the house for and the amount owing on your loan. You can do away with the deficiency judgement if you file a 7 bankruptcy and do NOT reaffirm the loan. Another possibility is a short sale WITH a waiver by the bank of the deficiency. A third possibility is to try and get a modification of loan through some of the government programs. Finally, if the bank forecloses stay in the house even after the sale. The bank will have to file an unlawful detainer action even after the sale to get you out. If they foreclose do not make the mortgage payment and at least you will be able to save money for your move. Sometimes it takes as much as two years for this process. If it was a bad loan you may be able to sue them which will delay the process even more and may result in a judgement against the bank.
Answer Applies to: California
Replied: 12/26/2013
Janke Legal Consulting | Bruce C. Janke
California has an "antideficiency" law that limits the lender on a purchase money loan to the remedy of foreclosure. The lender cannot sue for any remaining loan balance. You don't have to continue to pay the impound amounts to take advantage of the law. But instead of just walking away, you might consider a short sale whereby the lender agrees to accept less than the full loan balance in full satisfaction of the debt. This will be somewhat less damaging to your credit score than a straight foreclosure. As a last resort, you could at least try to negotiate a "cash for keys" deal with the lender. Many lenders will pay moving costs of several thousand dollars if you voluntarily transfer the house to the lender, which saves the lender the cost and time of foreclosure. You should discuss your options with a real estate agent who specializes in short sales. It won't cost you anything. The agent will be happy to give you free advice hoping to get the listing.
Answer Applies to: California
Replied: 12/24/2013
Stacy Joel Safion, Esq.
Stacy Joel Safion, Esq. | Stacy Joel Safion
You probably need to short sale the property. If they bank forecloses they will sell the house at a trustee sale or if no one bids at the sale, it will go back to the bank. However id you have a 2nd that you took out after you purchased the house, they could sue you.
Answer Applies to: California
Replied: 12/24/2013
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