I own a home in California that has several home equity loans on it. All of the loans are with Wells Fargo and the loan was created and signed in CA. I have since moved to Idaho and can no longer make the loan payments on the CA house. The house is now less considerably less than the loan amounts. Idaho is not a debt forgiveness state and CA is. Would this be an Idaho case since I now live there or a CA case since that is where the house is and where the loan was created and signed? Additionally, if the house goes into foreclosure can I be held liable for the difference between the sale price and the loan balance?
Since you signed this agreement in California, and since the property in question is in California, the California courts should have jurisdiction in your case. You should keep in mind, however, that if a creditor is able to obtain a judgment against you in California, it may be able to “domesticate” the judgment in Idaho. If a creditor domesticates a judgment against you in Idaho, it may be able to execute on your assets in Idaho, possibly including your wages, bank accounts, and personal property, just as if it had obtained a judgment against you in Idaho. The creditor may also be able to execute against any assets you still have in California. Given the complexity of your situation and the possible legal consequences associated with the creditor pursuing you for the collection of this debt, I strongly encourage you to consult with an attorney to discuss your situation and the best course of action available to you to resolves these debts.
You mention in your question that California is a “debt forgiveness” state. I believe that you are referring to the California Code of Civil Procedure, Section 580(b), commonly referred to as the “anti-deficiency balance statute”. This law states that a lender may not obtain a judgment for a deficiency balance arising from a purchase money loan, meaning that an original mortgage lender cannot obtain a judgment for a deficiency balance if it is forced to foreclose. However, home equity loans are not affected by this law, as they are not purchase loans, so Wells Fargo may be able to obtain judgments against you for any deficiency on the several home equity loans on your property. Also, this law generally applies only to homes used as the primary residence of the borrower; since this property is no longer your primary residence, you may be subject to a deficiency balance judgment even on your primary loan. Again, you should consult with an attorney, preferably a California real-estate attorney, to determine what action the bank can take against you to collect on any deficiency balance remaining on your loans after foreclosure. To learn more about foreclosure and deficiency balances, I encourage you to visit the Bills.com Foreclosure page.
The fact that you may be subject to deficiency judgments for your home equity loans means that you may need to work with your lenders to repay any deficiency balances even if you have decided to let your property go into foreclosure. You may also want to try to prevent the property from going into foreclosure by selling the home through a short sale. You should contact your lender and explain your situation to find out what programs the bank can offer you to resolve this problem before foreclosure is necessary. Again, you should speak with an attorney to determine your rights in this situation and to help you determine the best solution to your financial problems. For example, you may be able to file for bankruptcy protection after foreclosure to protect your assets from further collection efforts by your creditors. For more information about bankruptcy, I invite you to visit the Bills.com bankruptcy page.
After speaking with your mortgage lender and an attorney, you will likely find that several options are available to you to help you take care of you current financial troubles.
I hope that the information I have provided helps you in resolving your financial difficulties, and help you Find. Learn. Save.