This entry was posted in Bankruptcy and Mortgages on Maby Admin. A typical California Non-Judicial foreclosure can be accomplished in as little as four months.Ĭonsult our experienced bankruptcy lawyers or bankruptcy attorneys for more information about California foreclosures, non-judicial foreclosures and judicial foreclosures in California. A non-judicial foreclosure is cheaper and quicker for a mortgage company to take a home back. The good news for homeowners in California is mortgage companies almost always seek foreclosure by non-judicial foreclosure and then cannot seek a deficiency judgment. The most unfortunate part of refinancing a home is that the loan officer or mortgage broker probably never even mentioned this consequence of refinancing. If a California homeowner refinances their mortgage, they are destroying the purchase money security interest and therefore losing protection given by California State Law. But this is only the case in California if the purchase money security interest still exists. A mortgage company cannot seek payment of any difference between the value of the home and the mortgage. In California, homeowners receive protection when a purchase money security interest is still in place and a homeowner defaults on the mortgage. The lender still has an interest in the property until you pay off the mortgage in full and the house is then owned free and clear.Īs mentioned above, each state has different laws regarding foreclosure. When you obtain a home loan, you do not own the home until you pay off the mortgage. The key point is the mortgage was obtained to purchase the home, not refinance or obtain money from an equity line of credit or second mortgage. In California a lender receives a purchase money security interest in a home to secure the payment of the mortgage given to purchase a home. What is a Purchase Money Security Interest? Each state has their own laws regarding the legal consequences of losing a home by foreclosure. While bankruptcy is governed by Federal Law, the foreclosure laws are governed by state law.
It is a little known concept because loan officers and mortgage brokers failed to tell people about what a purchase money security interest is when convincing homeowners to refinance or take out equity lines of credit and second mortgages. One of the little known concepts regarding the mortgage crisis in California is PMSI or purchase money security interest.
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