Is it possible to just walk away?

Yes, it is possible to walk away. Under California’s new laws, when you go through foreclosure, the banks cannot sue you for a deficiency on your first mortgage. However, if you have a second mortgage or a home equity line of credit, they can. And they probably will.

(One of the benefits of a short sale vs a foreclosure is that when you choose to short sale your San Diego house, none of your mortgage lien holders can sue for deficiency.)

However, even if you don’t have a second mortgage, walking away and allowing your house to go into foreclosure is one of the worst possible choices you could make. It should not be done without careful consideration.

The pitfalls of a San Diego foreclosure…

Foreclosure will severely impact your credit rating for many years to come. This will not just impair your ability to purchase another home, it will affect your ability to rent, to get a job or a promotion, and even to order cellular telephone service or cable television.

In addition, if you’re in a “sensitive” job, it could cause termination.

As for your ability to purchase another home – mortgage loan applications used to ask if you had a foreclosure in the past several years. Now they ask if you have EVER had a foreclosure. If the answer is yes, you’ll have to supply even more information and may well be turned down for that loan.

A further danger is that you could be trapped in a Zombie foreclosure. Should this happen, bills on your foreclosed house will keep mounting, and you could remain liable for several years. Learn more about Zombie foreclosures.

If you do choose to walk away, do NOT pay anyone to help you. Just call the lender and let them know.

If you’d like to discuss your other options, such as a San Diego short sale, a strategic default, or even a loan modification, do call call 619-929-1413 or write td@tomdunlap.com. We’ll be happy to talk with you.

What about the new “Walk away” program from Fannie Mae?

The new program is essentially a deed-in-lieu of foreclosure. The only thing new is that Fannie now says they’ll approve the process for homeowners who are not delinquent on payments.

The impact on your credit is still the same as a foreclosure, and it’s still a poor idea for California homeowners. Here’s why.

If you have specific questions you’d like answered, call 619-929-1413 or write td@tomdunlap.com. We’ll be glad to share the benefit of our experience in closing hundreds of San Diego short sales.


Please note that the information provided on this San Diego short sale page is generic, academic information used for general information purposes and may not be construed as or relied upon as a promise for a specific outcome.

This site provides information about real estate, law, income taxes and credit scores as relates to borrowers in distress, short sales and similar situations. The site is designed to help users safely cope with their own needs. Information is not the same as advice — the application of law or regulations to an individual’s specific circumstances. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a lawyer, tax adviser or other specialist if you want professional assurance that our information, and your interpretation of it, is appropriate to your particular situation. The models in photographs accompanying the testimonials on this website are used for illustrative purposes and are not a personal endorsement.