Mortgage in CA

[cafiler]

If you own a house in california
no second mortgage.

Suppose people cant afford it and walk away from the house, what will happen to the debts owed?

[LadyInTheRed]

The debt will be paid from the proceeds of a foreclosure sale. If you have equity, the balance of the sale proceeds, after payment of all expenses of foreclosure, will be paid to you. If the mortgage is underwater, and it is a "purchase money loan", meaning it is the original loan used to purchase the house, you will have no liability to pay any deficiency, but you may have a tax bill.

[cafiler]

Oh ok.. you mean if buy the house for 450k adjustable interest and suddenly because the bad market now it went down to half, and i dont have equity neither have ask for any extra loan. i will be forgive after the bank sold my house even tho they were not able to sell it for 450? what do u mean about taxes? like if i owe property tax?

[nc73]

You get a 1099 for the forgiven debt. You may owe taxes when you do your return but it may be forgiven if you were insolvent at the time. Google is your friend.

[cafiler]

You get a 1099 for the forgiven debt. You may owe taxes when you do your return but it may be forgiven if you were insolvent at the time. Google is your friend.

Thank You to both of you, anyone is free to comment more