Post Foreclosure Liability – Will Mortgage Lenders Go Immediately after California Borrowers?

Here are three tips to help you avoid overpaying for a convertible adjustable rate loan when mortgage refinancing.

Many mortgage companies push convertible Adjustable Rate Mortgages because they can qualify homeowners at a lower interest rate claiming when interest rates drop you can convert your mortgage to a fixed interest rate. You get a higher mortgage rate.

This simply isn't true; when converting your Adjustable Rate Mortgage to a fixed interest rate, you'll pay a rate premium of .25 to 1 percent or more.

If the lender doesn't charge you an up-front fee, you'll pay with a higher starting mortgage rate or higher loan origination fees.

Suppose you've got the convertible loan option.

Mortgage Refinancing - That Convertible Adjustable Rate Mortgage Could be a Clunker

CCP § 580(d) specifically bars deficiency judgments after a non-judicial foreclosure.

Unlike a trustee's sale, a judicial foreclosure is a lawsuit where the lender must sue all parties having subordinate interests in the property in order to extinguish their interests upon the foreclosure sale.

The principal advantage to a lender in pursuing a judicial foreclosure is that the lender can obtain a deficiency judgment provided: (1) the loan is a nonrecourse obligation and (2) no anti-deficiency laws apply.