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My second mortgage holder is unwilling to accept a short sale. Am I still liable for the 2nd mortgage? Am I protected in CA?

Asked over 2 years ago - Elk Grove, CA

My husband has been without a job for over a year. We want to do a short sale. The 1st mortgage holder says yes, 2nd says no unless I keep my payments up- not possible at this time. Both loans were for purchase money in 2005. Is there any protection under CA law?

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Attorney answers (2)

Andrew Daniel Myers

Reputation Level 20

Answered over 2 years ago. Personal Injury Lawyer in North Andover, MA.

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If the value of your home is equal to or less than the payoff on the first mortgage, then you can strip off the second mortgage in a Chapter 13 bankruptcy. In other words, if you have no equity beyond the amount of the first mortgage, then the second mortgage is not secured by any equity in your home. So, in a Chapter 13, the second mortgage holder has nothing to say about it, if the numbers dont' add up, you can strip their mortgage.

This answer is provided for informational purposes only. Actual legal advice can only be provided in an office consultation by an attorney licensed in your jurisdiction, with experience in the area of law in which your concern lies.

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James Joseph Falcone

Reputation Level 11

Answered over 2 years ago. Business Attorney in Sacramento, CA.

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The problem with your situation is that the buyer will not agree to close the sale if the 2nd lender does not agree, because the 2nd lien would remain attached to the property.

You focused on the correct question if you allow the property to go to foreclosure. Where the loan was for purchase of the property, and not a re-finance, California law generally provides that the borrower is not personally liable for the debt.

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The content of this comment contains general information based on California law and is provided for informational purposes only, and should not be construed as legal advice on any subject matter. You require specific legal advice and should not rely on general information provided in response to a question posted on Avvo. You should consult with an attorney to discuss the matter and for any specific legal advice.

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