Quote from SuperVolatility:
Nik,
his house is not paid for. He did a 100% financing and current balance is $200K higher than market yet. Another example. House is worth at market reate at 300K but his loan balance is 500K.
Now he is thinking to buy a bigger house in a nicer location for $300K and 'walking away from his current house where balance is 500K' - walking away means foreclosure.
I own 4 properties...he only owns his own house so he has no plans of buying any more property for the next 10 yrs if he can buy a bigger one now and let the old/500K one go to the banak, become bank owned.
Quote from traderNik:
If your 'friend' manages to gain legal ownership of the second house in his name before defaulting on the first mortgage, they will come after everything he owns when he defaults on the first loan.
Quote from blackjack007:
calif is a non-recourse state, and this is a purchase loan for an owner-occupied property, so i think what you said is not true.
one other thing for the o.p. to note: if your friend walks away, the lender will file a 1099 to indicate capital gains on the amount that was deficient when they auction the home, so he's gonna owe money regardless.
very intresting
Quote from blackjack007:
calif is a non-recourse state, and this is a purchase loan for an owner-occupied property, so i think what you said is not true.
one other thing for the o.p. to note: if your friend walks away, the lender will file a 1099 to indicate capital gains on the amount that was deficient when they auction the home, so he's gonna owe money regardless.
Quote from traderNik:
Wow, are you serious? I haven't got time right now to click on the link just provided above but I'll be floored if you can walk away from a mortgage, buy another home and not be in danger of having everything you own confiscated by the original lender.