Actually, some people are finding that they are. Don't know why some are and some aren't, but I've heard of people doing this only to find they're on the hook later. I know a lot of people are doing this, some forced, many not, but really... a guy with this much money doing it because "he's never there" and "it seemed like a bad business investment" just really doesn't sit right with me. Can find plenty of other homes? Better bring cash. What an Entrepreneurial and Thought Leading attitude. At least he still has all his cars and businesses... I'm sure the bank that lent him the money loves hearing that.
It happens all the time. Is it fair that his property value is less than his Mortgage? People are getting hit hard buy low home values and It's safe to say the bank made a ton of money on the interest of the loan so they will be just fine. If it was you in that position you'd do the same thing. I know I would.
of course he is.... he owes the money on the note that's secured by the house. if he owes $10 on the note and the bank forecloses and finds that it can't get $10 selling the house (after attorneys' fees and expenses, as well) then he's liable for the deficiency. the home simply secures the bank's payment on the note...but if the collateral comes up short, it's not like the debtor walks away from what he still owes.
Good call to exit the homeownership game when the chips were down. I guess he's now just rentin' dirty.
His credit rating will take a hit, but somehow I expect people will continue to lend him money regardless.
I'm sure HIS lawyers figured it out and protected his assets before making this decision. Rappers have Attorneys too.
That's how it is where I live max. But I recall some states (California?) have special rules over primary residences.... Which creates a weird motivation to rack up the debt on the home and walk if the value declines.
they may agree not to pursue him for the deficiency. but technically, he owes the money. still shows up on a credit report, if that matters to him. of course, if he owes that much to the IRS, then it probably is wrecked anyway.
Generally not. The bank typically forgives the debt, and you are possibly subject to tax on that forgiveness. The thing with the banks is if it worth the hassle to try to get the money, and the answer is usually no.
because you're guessing they may not pursue him for the deficiency?? i'm saying that you posted rather definitively that he wouldn't be responsible for anything else.....the default setting is you're wrong. if there's something else to this i'm unaware of, good for him. but when you said, nope, to the question of "If the house is worth less than the mortgage, is he on the hook for the difference?", that's definitively wrong. He still OWES the money and it's still on his credit report.
the answer is usually no when they think the person they would sue to get the deficiency from has no assets to pursue....which is typically the case with the average foreclosure i don't know if that's the case with chamillionaire or not....but most of the banks i've represented would say, "hell, yes, we want the judgment...because a guy like that is likely to have assets we can grab at some point, even if he doesn't right now."
