I was trying to do a short sale on my house in california when the 1st foreclosed on me last month after 1.5 years of trying to get my 1st, 2nd, and realtor on the same page. I just received a bill from a collection agency for the balance on the 2nd with chase for $92,500. I had been working with them on a settlement for the short sale and they said we would have to start settlement over if 1st foreclosed so I was waiting for a call from them to start that. Is there any type of lawyer that can help me with this? Can I still work with Chase or do I have to work with this collections agency? I found this link which kind of gave me some hope.
Real Estate Attorney
This is general discussion and not intended as legal advice, nor does it form an attorney-client relationship. A thorough review of your particular facts must be completed prior to advising on this situation.
Well, it depends. California has some very good laws that protect borrowers after foreclosure. Often the best protection is the foreclosure process.
Your case depends on whether or not the second loan was obtained when you purchased your home, or was it obtained after you purchased. CA has non-recourse loans if they are "purchase money" loans where the lender can only seek the property and not a "deficiency judgment" for outstanding balances. This protection extends to second loans if they were obtained when the property was purchased. So you may not have to pay anything.
Often, lenders try to recover money and at times even sue on loans that are completely protected, but if the borrower does not respond to the lawsuit, lenders can obtain a "default judgment" and lien the borrower.
If the second loan was not a purchase money loan then you may be subject to a deficiency judgment after the lender files a lawsuit for the unpaid amount. When this happens, I see people come in to file bankruptcy in order to avoid the cost of litigation and the dollar amount in the loan.
I have some info on sdhomelaw.org you can look over. Good luck!