San Diego short sale


Monday, June 16, 2008

Sold out juniors and collections attorneys

My girlfriend refinanced her property about ____ months ago and took out some cash on an 80/20 loan from the same lender. The lender just foreclosed on the property, but they have accelerated the collection efforts on the SECOND (the 20%). Google is not helping me research the specifics of judicial vs Non Judicial and recourse vs non recourse. So in plain English, can the lender come after her for the second?? Will they issue her a 1099 for a deficiency judgment? will she have to declare BK to protect her other assets??

I know you are busy, but if you could point me to the website that answers these questions and refrences ACTUAL laws rather than opinions. I get differing views, but they are only opinions. I need to know the law to be able to protect her. Thanks in advance.


Your girlfriend may be liable for the full amount of the note (and perhaps) fees if it turns out the lender is a sold out junior of refinanced loan secured by the property.

There are some questions to review

1. Did the second get any money after the foreclosure
2. Can you show a unity of ownership between the holders of the first and the second notes?

In short you need to learn about sold out juniors. Although it might be a little late to learn.

Bankruptcy may be an option - but it might not protect her other assets.

Your girlfriends situation is complicated and my question is why did she accept the foreclosure without attempting some sort of workout - if she had other assets.

Regarding a 1099 theoretically she should may not get hit with the 1099 if they are going after her for the money. But, if they do not get the money - she might have to report the loan forgiveness herself.

There are many variables and I would say your girlfriend needs to work with an experienced attorney to make sure she gets it right.