I think this whole discussion may be flawed by the fact that a borrower may not be able to walk away from an FHA loan. Granted, it remains to be seen if/when/how the government will go after defaulting FHA borrowers, but I am becoming more and more confident that the U.S. government will have the right. I.e. see the snippets I pulled below.
“The antideficiency legislation is only a state law and is not binding on the federal government. Therefore, if the purchase-money obligation is federally funded or insured, the trustor remains personally liable for a deficiency judgment.”
U.S. v. Haddon Haciendas Co., 541 F.2d 777, 782 (9th Cir. 1976); U.S. v. Allgeyer, 466 F.2d 1195, 1196 (9th Cir. 1972); Branden v. Driver, 441 F.2d 1171 (9th Cir. 1971); U.S. v. Rossi, 342 F.2d 505, 506 (9th Cir. 1965); U.S. v. View Crest Garden Apts., Inc., 268 F.2d 380, 383 (9th Cir. 1959); McKnight v. U.S., 259 F.2d 540, 544 (9th Cir. 1958).
“Loans that are insured by the federal government under FHA and VA programs are subject to comprehensive regulations covering all aspects of the rights of the lender, borrower, and government in the event of a default and subsequent foreclosure. These regulations apply exclusively
to such loans and supplant any inconsistent state regulations on the subject. Therefore, purchase money obligations insured by either VA or FHA are not subject to the antideficiency provisions of Code Civ. Proc. § 580b, and the government may seek reimbursement from the borrower of any claims that it has paid under its loan guaranty agreement.”
United States v. Shimer (1961) 367 U.S. 374, 381, 81 S. Ct. 1554, 6 L. Ed. 2d 908. United States v. Allgeyer (9th Cir. 1972) 466 F.2d 1195, 1196 (FHA loans) ; United States v. Rossi (9th Cir. 1965) 342 F.2d 505, 506 (VA loans) .
