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  1. #1
    Join Date
    Dec 2008
    Posts
    2

    Default California Deficiency Judgement on HELOC

    My question involves a foreclosure in the State of: California


    Hi,

    I purchased my home here in California on a 192K/48K ((80/20 5 yr. ARM loan) last March 2004 and my 5yr fixed is ending which means I will be paying a high monthly mortgage this March 2009. Since I may not be able to afford payment anymore when the interest reset and the other reason is that I have other huge credit card bills, I am thinking of having it foreclosed. From past to the present I am only paying interest to these both loans

    And sometime a year ago, since I still have some positive equity at that time I was tempted to take a Heloc from Chase on my 2nd mortgage in the amount of $15000 and is now added to the balance that I paid interest only every month. ( I think Chase modified my 2nd mortgage which I signed making it $63K instead of the original $48K)

    If I have this home foreclosed will there be a possible deficiency judgement on the entire 2nd loan which is now about $ 63,000 or just the $15000 that I took?

    Thanks in advance,

    Iam Ashamed

  2. #2
    Join Date
    Apr 2008
    Location
    Texas (Dallas area)
    Posts
    1,404

    Default Re: California Deficiency Judgement on HELOC

    Quote Quoting Iam Ashamed
    View Post
    My question involves a foreclosure in the State of: California


    Hi,

    I purchased my home here in California on a 192K/48K ((80/20 5 yr. ARM loan) last March 2004 and my 5yr fixed is ending which means I will be paying a high monthly mortgage this March 2009. Since I may not be able to afford payment anymore when the interest reset and the other reason is that I have other huge credit card bills, I am thinking of having it foreclosed. From past to the present I am only paying interest to these both loans

    And sometime a year ago, since I still have some positive equity at that time I was tempted to take a Heloc from Chase on my 2nd mortgage in the amount of $15000 and is now added to the balance that I paid interest only every month. ( I think Chase modified my 2nd mortgage which I signed making it $63K instead of the original $48K)

    If I have this home foreclosed will there be a possible deficiency judgement on the entire 2nd loan which is now about $ 63,000 or just the $15000 that I took?

    Thanks in advance,

    Iam Ashamed
    I am sorry to hear of your problem, but here is the big issue;

    In Calif any PURCHASE MONEY MORTGAGE is not subject to a deficiency judgment.

    If your original first mortage which you used to purchase your home has not been re mortgaged then you are in the clear on that.

    Your second mortgage which you also used to purchase your home is also NOT subject to a deficiency judgment as long as you NEVER refinanced it. Since you did refinance and or modify it, it is no longer a purchase money mortgage, therefore, Chase can file a deficiency judgment against you for the full $63,000.

  3. #3
    Join Date
    Dec 2008
    Posts
    2

    Default Re: California Deficiency Judgement on HELOC

    Quote Quoting OhMy
    View Post
    I am sorry to hear of your problem, but here is the big issue;

    In Calif any PURCHASE MONEY MORTGAGE is not subject to a deficiency judgment.

    If your original first mortage which you used to purchase your home has not been re mortgaged then you are in the clear on that.

    Your second mortgage which you also used to purchase your home is also NOT subject to a deficiency judgment as long as you NEVER refinanced it. Since you did refinance and or modify it, it is no longer a purchase money mortgage, therefore, Chase can file a deficiency judgment against you for the full $63,000.


    I very much appreciate your reply.

    I was able to find the 2nd loan (Chase) modification I signed with them last year. And on the modification agreement page it states:

    Lender has extended credit to borrower pursuant to a HELOC Agreement and Disclosure Statement dated March 23, 2004, ( The "Equity Line Agreement"). The debt evidenced by the Equity Line Ageement is secured by a Mortgage/Deed of Trust/Security Deed dated March 23, 2004 and recorded on March 26, 2004 i Recording/instrument number ##### in the office of the County Clerk of ####County.

    NOW, THEREFORE, for valuable consideration, receipt of which is hereby acknowledged, Borrower, Grantor/Trustor and Lender hereby agree as follows:

    The Equity Line Agreement is hereby amended to change the amount of credit available to Borrower("Credit Limit") to $63,000.00. The Mortgage is hereby amended to state that the total amount secured by the Mortgage shall not excedd $63,000.00 at any one time.

    CONTINUING VALIDITY. Except as expressly modified above and by previous modification(s), if any, specified above, the terms of the original Mortgage shall remain unchanged and in full force and effect. Consent by Lender to this Modification does not waive Lender's right to require strict performance of the Mortgage as changed above nor obligate Lender to make any future modifications. Nothing in this Modification shall constitute a satisfaction, novation or partial release of the Equity Line Agreement secured by the Mortgage. It is the intention of Lender to retain as liable all parties to the Mortgage and all parties, makers and endorsers to the Credit Line Agreement, including accomodation makers, shall not be released by virtue of this Modification.



    Since with these statements, it appears that the credit line was just extended. And on the Continuing Validity it states that the original mortgage remain unchanged.

    I am still confused. I appreciate if somebody can interpret this modification for me.

    Thanks again!

  4. #4
    Join Date
    Apr 2007
    Location
    Southeastern Michigan
    Posts
    1,226

    Default Re: California Deficiency Judgement on HELOC

    You need to take all of your documentation, loan agreements, applications, etc. to an attorney for review.

    Your situation appears a little complex and only a qualified attorney with specific knowledge of the law in your state can properly assist you.

  5. #5
    Join Date
    Apr 2008
    Location
    Texas (Dallas area)
    Posts
    1,404

    Default Re: California Deficiency Judgement on HELOC

    It does appear to be a modification which will void your purchase money mortgage IF they re filed the new doc in the county clerks office. Here is a easy way to find out.

    Pull your credit report at Equifax and at Experian. You need to pull both.

    If on your credit report it sates on the second mortgages PURCHASE MONEY SECOND then you are in the clear, if it states "second mortgage or refinanced Mortgage they you have a problem.

    Actually if it says anything other then Purchase Money Mortgage then you will have a problem as well.

    Do NOT think for a moment that Chase does not know what they are doing. I am sure they have this a a modification, it is how they can secure their debt in California. After going through thousands of these types of loans they rather modify and give you an additonal amount of money then lose everything. Again, they know exactly what they are doing and I am pretty sure that this is a modified loan.

    Here are the links so you can see how it is reported on your credit reports. No need to pull from Transunion, they do not give the information we would need.

    http://www.experian.com/

    http://www.equifax.com/home/

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