Personal Liability for Walking Away from Mortgage

If I default on a mortgage because the value of my home is less than what I owe and walk away letting it go into forclosure,what would be my personal liability?

1 Answer

It depends on the state. California has strong anti-deficiency laws, where Nevada, where I am, does not. 

Check with a knowledgable attorney in your state.  Some states have written their laws based on whether or not it is a purchase money contract, and some on whether or not it is a refinancing situation.  In Cal you lose the protection when you re-finance or take money 'out of your house'.  Once the first forecloses the rights of the second change substantially.  It is all a function of local law and you probably will not find a correct answer in a 'one size fits all' type website. 

Also, it is important to know if there is some sort of federal guarantee behind the mortgage or deed of trust.  If there is then there is a preemption type problem.  It is a complicated mess, that's one of the reasons it is going to be so hard to fix.