Is California one of the states which holds me responsible for the balance of the loan when they sell my house in foreclosure?
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3 Comments
No as long as yu still have your original loan from the purchase you are free and clear. They can not come after you.
California is a non-recourse state. That means a person is not responsible for the deficiency after foreclose. The conditions that apply are as follows:
1. Property was owner-occupied.
2. Mortgage was purchase-money (i.e., not a refinance)
3. Property is residential unit with 1, 2, 3 or 4 units.
Only if it is not a primary home, you have a refinanced loan, or a HELOC which are both recourse loans. If the lender forgives the HELOC, you will be issued a 1099-c and will need to report that amount as income on your tax return. First and second mortgages on a primary residence that are forgiven are not taxable due the the Debt Forgiveness Act of 2007.