1)The Mortgage Relief Act of 2007 eliminated 1099’s. If you short sell your home you will not receive a 1099.
2) Even though a refinance loan is recourse by law, very few banks go after borrowers for a deficiency judgment. For starters, they have to pursue “judicial foreclosure” rather than “Trustee Sale” which is lengthy and expensive for them. Also, they realize the person can just file BK and wipe out the judgment so the risk is not worth the reward.
It’s all about the cheapest course of action for the bank, that’s how they gauge decisions.
I work with alot of borrowers who have foreclosed on a refinance loan. Once the Trustee sale occurs, they are free and clear from a deficiency judgment because it has to come by “judicial foreclosure”. I have not seen any deficiency judgments to date…..
The real reality is…there is not much risk to investing in RE in CA other than negative remarks on your credit report which can also be removed.
I know people who stripped all the cash out of their homes prior to foreclosure and walked away with no ramifications other than the credit hit……a have seen short sales and foreclosure remarks be removed from credit reports for these borrowers and their scores return to pre-foreclosure numbers……
