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Foreclosure procedures do depend a little on jurisdiction (ie judicial vs nonjudicial foreclosure states or both), but even within those non-recourse states you

Foreclosure procedures do depend a little on jurisdiction (ie judicial vs nonjudicial foreclosure states or both), but even within those non-recourse states you link to, lenders can in fact come for deficiency judgements between the balance of the loan and the fair market value of the property. You can find many articles about California, for example, where they will say someththing like “in California, in most foreclosures banks can’t go after borrowers for deficiency judgement”, but it’s misleading. California has both judicial and nonjudicial foreclosure, and judicial foreclosures allow deficiency judgments and nonjudicial foreclosure generally don’t. So why don’t all lenders go for the judicial foreclosure and for the deficiency judgement? Time and Money! It simply takes longer and costs more to go the judicial route and why do that if you ultimately can’t collect from the borrower? The thing is the banks/borrowers have so much data, their automated systems are pretty good at knowing if they will likely be able to collect enough to cover the extra cost of the judicial foreclosure in which case they go that route and then for the deficiency judgement. Once they have that they can garnish wages, attach accounts, etc...

dragonwriter 8y ago
> You can find many articles about California, for example, where they will say someththing like “in California, in most foreclosures banks can’t go after borrowers for deficiency judgement”, but it’s misleading. California has both judicial and nonjudicial foreclosure, and judicial foreclosures allow deficiency judgments and nonjudicial foreclosure generally don’t. This is more misleading than what it “corrects”, which is actually entirely correct for the case usually of interest (and which the articles are almost always specifically addressing), owner-occupied residential properties. Its true that California allows deficiency judgements for judicial foreclosures except as barred by the State anti-deficiency statute. But that statute prohibits all deficiency judgements for purchase-money or refinance loans for residential property with up to four units when the owner/borrower resides on the property (and, unlike most anti-deficiency statutes, covers second and subsequent mortgages for that purpose, not just first mortgages.) https://www.weltman.com/?t=40&an=40108&format=xml&p=7735 https://www.weltman.com/?t=40&an=40108&format=xml&p=7735
- will_brown 8y ago
  In light of the question I was answering: >Is my understanding really untrue and the banks can go after your other assets in all US states? My response is not misleading by any means. Especially when that question came as a direct response to the same person who originally broadly stated you can just mail your house keys to the bank and walk away. My point is simple and fairly obvious...don’t mail your keys to the bank and think you can walk away, even if you are in a non recourse state. I used California as a perfect example of a non recourse State that has both judicial/nonjudicial foreclosures and in judicial foreclosures allows...recourse (deficiency judgments). Yes you included a few rules outlining where deficiencies would not be available, but the fact defiency judgments are available at all - especially in California, which is ultra stringent even amoung non recourse states - is the much bigger point being discussed.
  - dragonwriter 8y ago
    > My point is simple and fairly obvious...don’t mail your keys to the bank and think you can walk away, even if you are in a non recourse state. Yeah, that's generally a fair point and there are lots of good examples you could have pointed to; California, however, isn't one of them. > Yes you included a few rules outlining where deficiencies would not be available A few rules, which happen to encompass the entire category usually discussed with the “mail your keys” thing: any single-family house you own, with one or more purchase or refinance mortgages, and live in. (And, well, more than that category usually at issue, because it also includes small multifamily units with the same other conditions.)
    - will_brown 8y ago
      >A few rules, which happen to encompass the entire category usually discussed with the “mail your keys” thing No it doesn’t encompass “the entire category”. Even in California deed in lieu of foreclosure cases (eg the bank agrees you can mail your keys in) banks can and do obtain defiency judgments in 5% of such cases. It reminds me of student loans, where lawyers and layman constantly say student loans are not dischargeable in bankruptcy. But they are. Student loans have a higher standard to discharge than most other debts. I guess people can say it’s misleading to say student loans are discharable -but they are- even if it’s a low percentage. The important part of the discussion is again it’s possible.

dragonwriter 8y ago

> You can find many articles about California, for example, where they will say someththing like “in California, in most foreclosures banks can’t go after borrowers for deficiency judgement”, but it’s misleading. California has both judicial and nonjudicial foreclosure, and judicial foreclosures allow deficiency judgments and nonjudicial foreclosure generally don’t. This is more misleading than what it “corrects”, which is actually entirely correct for the case usually of interest (and which the articles are almost always specifically addressing), owner-occupied residential properties. Its true that California allows deficiency judgements for judicial foreclosures except as barred by the State anti-deficiency statute. But that statute prohibits all deficiency judgements for purchase-money or refinance loans for residential property with up to four units when the owner/borrower resides on the property (and, unlike most anti-deficiency statutes, covers second and subsequent mortgages for that purpose, not just first mortgages.) https://www.weltman.com/?t=40&an=40108&format=xml&p=7735 https://www.weltman.com/?t=40&an=40108&format=xml&p=7735

will_brown 8y ago
In light of the question I was answering: >Is my understanding really untrue and the banks can go after your other assets in all US states? My response is not misleading by any means. Especially when that question came as a direct response to the same person who originally broadly stated you can just mail your house keys to the bank and walk away. My point is simple and fairly obvious...don’t mail your keys to the bank and think you can walk away, even if you are in a non recourse state. I used California as a perfect example of a non recourse State that has both judicial/nonjudicial foreclosures and in judicial foreclosures allows...recourse (deficiency judgments). Yes you included a few rules outlining where deficiencies would not be available, but the fact defiency judgments are available at all - especially in California, which is ultra stringent even amoung non recourse states - is the much bigger point being discussed.
- dragonwriter 8y ago
  > My point is simple and fairly obvious...don’t mail your keys to the bank and think you can walk away, even if you are in a non recourse state. Yeah, that's generally a fair point and there are lots of good examples you could have pointed to; California, however, isn't one of them. > Yes you included a few rules outlining where deficiencies would not be available A few rules, which happen to encompass the entire category usually discussed with the “mail your keys” thing: any single-family house you own, with one or more purchase or refinance mortgages, and live in. (And, well, more than that category usually at issue, because it also includes small multifamily units with the same other conditions.)
  - will_brown 8y ago
    >A few rules, which happen to encompass the entire category usually discussed with the “mail your keys” thing No it doesn’t encompass “the entire category”. Even in California deed in lieu of foreclosure cases (eg the bank agrees you can mail your keys in) banks can and do obtain defiency judgments in 5% of such cases. It reminds me of student loans, where lawyers and layman constantly say student loans are not dischargeable in bankruptcy. But they are. Student loans have a higher standard to discharge than most other debts. I guess people can say it’s misleading to say student loans are discharable -but they are- even if it’s a low percentage. The important part of the discussion is again it’s possible.