Asset Protection is one of the busiest areas of practice due to the economy. As more banks are foreclosing on mortgages, they are now seeking recovery of the debt owed beyond the value of the home, where the homeowner is not protected by the anti-deficiency rules.
In California, purchase money loans are subject to anti-deficiency rules. This means that if you stayed with your original loan when you first purchased the home, and if the loan is foreclosed, the lender can only recover the house. Anti-deficiency rules do not apply to loans which have been refinanced. They also do not apply to home-equity loans. Therefore, if the mortgage was refinanced and the home gets foreclosed upon and the lender recovers less than the amount of the loan, the lender can file suit against the borrower to recover the balance of the deficiency.
If you are facing foreclosure, you must talk to a loan work-out attorney who will assist you in negotiating with the lender if you anticipate a deficiency. With the housing prices continuing to decrease in Southern California, there is significant chance of deficiencies in recovery by lenders. Prudent advice from a loan work-out attorney can protect your other assets in the event of a foreclosure.
Mina N. Sirkin is a Family Wealth Lawyer in Los Angeles, California. Ms. Sirkin is a Board Certified Specialist attorney in Estate Planning, Probate and Trust Law by the Board of Legal Specialization of the State Bar of California. http://www.SirkinLaw.com. MSirkin@SirkinLaw.com.
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