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When I originally purchased my home in California it was owner occupied. However, I am contemplating foreclosure and was wondering if the loan is now a recourse loan because it is non owner occupied. The loan has never been refinanced.

Thanks,
kmart1523

larry · Joined: 27 Jun 2007 Posts: 3322 474.67 Dollars($)

Hi kmart.

Welcome to the forum.

I think if this is a non-owner occupied property then the loan will be a recourse loan. But I would suggest you to contact with the lender and also read the mortgage documents thoroughly. BTW why don't you try and avoid foreclosure. I think you should talk to your lender and try to avoid foreclosure.

Feel free to ask if you have any further questions

Best of luck.
Larry

Hi Kmart,

Welcome to our forums.

In California, most purchase mortgages are non-recourse loans. Just because you don't occupy it anymore, I don't think it gets converted to a recourse loan. Did you lender ever speak to you about it? I think he needs to send you a notice in such a case.

Caron · Posted: Tue Jul 08, 2008 5:55 am Post subject:

Oh! that was me above, I'd been logged out somehow... Smile

cliff3 · Posted: Tue Jul 08, 2008 12:55 pm Post subject:

Hi Kmart1523,

I too am concerned that you did not mention that you would like to know about options to avoid foreclosure. Contact your lender right away. There are usually several options available to you to avoid foreclosure. Foreclosure is very damaging to your credit.

Larry and Caron are correct about the recourse and non-recourse. I thought I would give a little deeper answer to your concern over that:

According to California law, a “nonrecourse” debt is when a loan is made under either one of the following two circumstances:
When the loan is made to purchase a one-to-four unit property and the borrower intends to occupy at least one of the units, or

When the seller carries back financing for all or a portion of the purchase price of any real property.

In the event of default by the borrower, the lender, or financing seller, is restricted to recovering the property with no right to proceed against the borrower for any deficiency.

And California law states that a “recourse” debt is one in which neither of those two exemptions occurs.
A recourse debt can be from refinances of existing mortgages, home improvement loans, equity lines of credit, and loans, other than seller financing, securing a debt for purchase of property that is not an owner-occupied one-to-four unit property. The lender is not limited to taking the property back and the borrower may be personally liable on the debt. If the lender chooses to foreclose using a trustee’s sale, then the lender waives the right to go after the borrower for the deficiency despite the fact that the loan was a recourse debt.

I hope that you have the information you were looking for. And please return to us for more information as you need it. Once again, always contact your lender and see what options you qualify for.

Good luck.

Guest

trying to avoid 2nd foreclosure. received notice of acceleration . bought as owner occupied,currently not livingb there 4 hours daily drive to work ,got to be too hard,but reconsidering moving back if have time to stop foreclosure, dont know or think have time before escalation of foreclosure process

adonis · Posted: Sun Nov 21, 2010 11:14 pm Post subject:

Welcome jonah,

If you want to avoid foreclosure, you will have to contact the lender and apply for a loan modification. If the lender accepts your request, then you will be able to save the property.

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