General Question about Mortgages

[WhiteOleander]

I have goggled, etc. and cannot find this anywhere. Does anyone know if, in Texas, a loan made to purchase an owner-occupied residence is nonrecourse by statute?

[sea-tax]

I have goggled, etc. and cannot find this anywhere. Does anyone know if, in Texas, a loan made to purchase an owner-occupied residence is nonrecourse by statute?

As far as texas goes I don't know , but most home mortgages are secured by the property and the individual who signs the loan documents. Meaning that if the porperty is foreclosed on and the property can't recoup the outstanding debt the mortgage company will usually go after the borrow to pay . This would make me lean towards a recourse debt.

[WhiteOleander]

Yes I agree. I found somewhere that in California that type of mortgage is by statute nonrecourse. So I was hoping to find out is that is true in Texas, I know that Texas used to have pretty strict laws about that. But alot changed in the '90's.

[sea-tax]

Yes I agree. I found somewhere that in California that type of mortgage is by statute nonrecourse. So I was hoping to find out is that is true in Texas, I know that Texas used to have pretty strict laws about that. But alot changed in the '90's.

It is definately possible that every state is different and because I am no expert in Texas tax law I will have to say I don't know. Interesting idea though, may I ask why you need to know this information?

[WhiteOleander]

Actually, I'm working on some "what-if" scenarios for a class on repossesions. This info would be very helpful.

[sea-tax]

Actually, I'm working on some "what-if" scenarios for a class on repossesions. This info would be very helpful.

have you a attorney friend in Texas that could possibly answer the question. I would call a bankruptcy attorney or one that specializes in foreclosures. I am sure they would know.

[WhiteOleander]

Thanks. I may give that a try.

[sea-tax]

good luck , post back if you find an answer I am interested to know.

[jainen]

Not exactly

>>in California that type of mortgage is by statute nonrecourse<<

Not exactly. In California, there are two types of home loans, and the lender always makes both at the same time.

A "mortgage" is secured by the borrower. The lender has to go to court to foreclose, but if the forced sale doesn't cover the full debt the borrower is still liable and the lender can sue for any other assets the borrower has. A "deed of trust" is much easier to foreclose, but it's only against the subject property so the forced sale eliminates the entire debt even if the lender loses money on it.

Since the borrower signs both documents, the lender can choose which way to go. Usually they foreclose on the deed of trust, but as property values drop we will see more judicial foreclosures against wealthy owners who are trying to walk away from their obligations.

[solomon]

White O

Try lawyers.com - I have gotten answer from Texas lawyers in the past.

[WhiteOleander]

>>in California that type of mortgage is by statute nonrecourse<<

Not exactly. In California, there are two types of home loans, and the lender always makes both at the same time.

A "mortgage" is secured by the borrower. The lender has to go to court to foreclose, but if the forced sale doesn't cover the full debt the borrower is still liable and the lender can sue for any other assets the borrower has. A "deed of trust" is much easier to foreclose, but it's only against the subject property so the forced sale eliminates the entire debt even if the lender loses money on it.

Since the borrower signs both documents, the lender can choose which way to go. Usually they foreclose on the deed of trust, but as property values drop we will see more judicial foreclosures against wealthy owners who are trying to walk away from their obligations.

Thanks Janien. I read what I originally said in a small paragraph. I'm glad you clarified it.

Actually what you described is how it works here in Texas. So, I was trying to find out if it was required by statute to be nonrecourse her as I thought it was in CA.

Just goes to show, you need all the info first. This is actually a group of about 15 that get together to look at different topics as it might relate to our tax prep. And since these laws are totally based on the state law, I wanted to give as much info on Texas as I could,

I may try getting an answer from Lawyers.com.