One of the little known concepts regarding the mortgage crisis in California is PMSI or purchase money security interest. It is a little known concept because loan officers and mortgage brokers failed to tell people about what a purchase money security interest is when convincing homeowners to refinance or take out equity lines of credit and second mortgages. While bankruptcy is governed by Federal Law, the foreclosure laws are governed by state law. Each state has their own laws regarding the legal consequences of losing a home by foreclosure.
Oakland Bankruptcy Attorney, About Bankruptcy, Student Loans Bankruptcy,
What is a Purchase Money Security Interest?
In California a lender receives a purchase money security interest in a home to secure the payment of the mortgage given to purchase a home. The key point is the mortgage was obtained to purchase the home, not refinance or obtain money from an equity line of credit or second mortgage. When you obtain a home loan, you do not own the home until you pay off the mortgage. The lender still has an interest in the property until you pay off the mortgage in full and the house is then owned free and clear.
As mentioned above, each state has different laws regarding foreclosure. In California, homeowners receive protection when a purchase money security interest is still in place and a homeowner defaults on the mortgage. A mortgage company cannot seek payment of any difference between the value of the home and the mortgage. But this is only the case in California if the purchase money security interest still exists. If a California homeowner refinances their mortgage, they are destroying the purchase money security interest and therefore losing protection given by California State Law. The most unfortunate part of refinancing a home is that the loan officer or mortgage broker probably never even mentioned this consequence of refinancing.
The good news for homeowners in California is mortgage companies almost always seek foreclosure by initiating a non-judicial foreclosure and then the mortgage company cannot seek a deficiency judgment. A non-judicial foreclosure is cheaper and quicker for a mortgage company to take a home back. A typical California Non-Judicial foreclosure can be accomplished in as little as four months. Be sure to contact an attorney in the state your property is located to find out more about the foreclosure process in that particular state. This information is geared toward California homeowners only. This information is also for informational purposes only and if you are facing foreclosure you should contact an attorney in your area to find out your legal rights.
Is Bankruptcy Right For You? Talk to Bankruptcy Attorneys Free and Confidential. Licensed bankruptcy attorneys are available. Attorneys will call you to discuss your case for free. Find out if bankruptcy is right for your situation.
Rating of Sacramento Bankruptcy Lawyers
Get Online Application at online Bankruptcy Lawyer.
0 comments:
Post a Comment