House transferred to child - is it fradulent? (In CA)

[balaneki]

It depends on several factors. If the first mortgage waives the deficiency and is there a second mortgage. However, if after everything is said and done, she does move into that "judgment proof" category, then of course the point is moot.

It's a first mortgage, there's no second mortgage.

And again I want to say that I can't tell all of you how much I appreciate your input on this. This has been a very difficult day and all of your feedback has been invaluable.

[starr4law]

Well, someone on this forum must know if in CA, first mortgages are typically waiving the deficiency (maybe start a new thread with this specific question?). If they are, then she is golden.

[StartingOver08]

OP, please have your friend rethink using a debt settlement company to settle her debts.

I think her plan is worthwhile, not filing BK because of the property transfer, but to use a debt settlement company to negotiate settlements will get her into more hot water. There are legitimate attorney's (some of them BK attorney's) that also perform settlement negotiations and payment arrangements with creditors. Use a 'small shop' that actually has attorney's and not one of those large firms that appear to be law firms but are really debt settlement co's (like lexington law ) She can also do the debt settlement herself and save the attorney fees. She can look at many sites for help, for example www.creditinfocenter.com has a comprehensive forum section discussing settlement strategies.

As to whether the a deficiency on her first mortgage for her primary can be pursued, is this the original loan from her purchase or did she refinance at anytime during her ownership?

[momofthree]

CA is a non-recourse state, meaning if it is the original mortgage that was used to purchase the home & has not been refinanced, then the mortgage company can NOT come after her for a deficiency balance.

[BCA2009]

CA is a non-recourse state, meaning if it is the original mortgage that was used to purchase the home & has not been refinanced, then the mortgage company can NOT come after her for a deficiency balance.

That's my understanding also. She needs to move into the rental property. Walk away from the mortgaged property. The bank can take it back and won't be able to get a deficiency judgement. Then she no longer has a rent/mortgage payment and can payoff/settle any other debts.

Sounds like BK is not her best option if the facts as presented are correct.

[tay666]

One more question.
Is she underwater on her mortguage?
If she has equity, then it would be better to sell the house, than to just let it go back to the bank.