On Feb 11, 11:38*am, PeterL <po.n...[at]gmail.com> wrote:
- quote -

You need to establish some facts. A purchase money mortgage in
California is typically "non-recourse (to other assets of his)". They
can't come after you if it goes to trustee sale (judicial foreclosure
is another matter and rare). If your friend refinanced, this option
is closed. The second mortgage may be a "recourse" (to other assets)
loan. I would establish whether the loans are recourse or non-
recourse and the amounts before making any decisions. You friend may
have access to a CPA or accountant who is familiar with these specific
matters. In general banks come after you if you have assets. This
would seem to describe your friend with a job. If you are jobless and
sleeping in your car they won't try too hard. They may periodically
demand payment (remember these notes get assigned and re-assigned all
the time like anything else that ends up in a collection agency) just
to make sure.

Figure out where your friend stands before making any decisions.

Another threadon this topic:
http://www.websitetoolbox.com/tool/p...ost?id=2472466

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PeterL wrote:
- quote -

I saw no reply suggesting he talk to the bank. They may agree to a
'short sale', and if they do, he can ask up front what the impact would
be to his credit rating. As others noted, there is no 'walking away'
without some repercussion. A tenant may solve the problem if it becomes
close to break-even. Not knowing the city or any of the numbers, we
don't know if that's a viable solution.
JOE

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On 2008-02-11 14:08:59 -0800, zxcvbob <zxcvbob[at]charter.net> said:

- quote -

Patience and time works wonders. Too many people in these emergency
situations are under pressure and believe they have to act quickly and
take a big loss. But sometimes slowing down and doing nothing for a
while would not increase the loss by much and could actually turn a
loss into a gain. Yes, a good property manager is essentially,
especially for someone who is living in another state. Handling rental
property may seem like a headache, but it is a lot better than taking a
$50,000 loss or dealing with foreclosuire and bad credit.

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"PeterL" <po.ning[at]gmail.com> wrote in message
news:a32130f1-65f5-454a-8870-b14828b0bec8[at]b2g2000hsg.googlegroups.com...

- quote -

Yes, he'll still be $50k in the negative. He has signed a note for the full
amount and the bank has every right to expect it repaid. When I served on
the credit committee at our credit union several years ago, I had an
opportunity to see a credit report for a member who had walked away from a
mortgage in California. The bank was claiming a balance still owed of $22k.

Elizabeth Richardson

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Don wrote:
- quote -


This is exactly what I did 16 years ago when in a similar situation.
After about 4 or 5 years, I was able to sell the house for an $11000
profit instead of taking probably a $20000 loss. The rent checks made
the mortgage payments and covered expenses in the mean time. The key is
finding a very good property manager. (Mine sought out middle-aged to
elderly renters with good credit.)

Bob

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On 2008-02-11 11:38:55 -0800, PeterL <po.ning[at]gmail.com> said:

- quote -

It seems to me there are better options. Why not keep the house and
rent it to tenants for a couple of years? Even if the rental income is
not enough to pay the mortgage each month, his loss over a couple of
years probably would not come to $50,000. In times when credit is tight
and house sales are slow, sometimes rents rise. And, who knows, in a
few years real estate may have recovered enough to sell without a
loss, or at a much smaller loss. Or, look at the really bright side.
Maybe he will do well in his new job and will be able to keep the house
as rental property for 10 or 20 years,when it will be worth two or
three times as much.

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I am trying to give advice to the son of a friend.

He bought a house two years ago with no money down. Aside from the
housing market downturn, he also lose his job. Fortunately he found
another job, but had to move to another state. He has an offer for
his house but he'll be losing $50,000 if he sells it to this buyer.
Since he has no money tied to this house, would it not make more
financial sense to simply walk away from this mortgage? His credit
will be in the toilets for a couple of years. But at least he won't
be $50,000 in the negative.

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