What can you do in california if you can no longer afford to pay your mortgage? I bought my house for 500k and now its probably worth only 430k. If I sell my home I will take a loss of 70k plus commision fees. I heard there is a law saying you don't have to pay the difference back in California, instead it just hurts your credit report a little bit. Is that true? Where can I find info on that , and what can I do?|||You don't have to pay the difference IF the bank agreed to the short sale before you signed a contract. Instead the bank writes it off and you receive a 1099 for the difference. You then have to pay income tax to the IRS and the state for that amount at tax time. You received the money already, did not pay any tax on it, and spent it on a house.|||The first thing you want to do is contact your lender, I'm serious. People always wait until the last minute - but if you start communicating with them immidiately - you may be able to help yourself. Yes short sales are optinos - but can be a headache and good ol Uncle Sam considers " A debt forgiven is considered income" so you could get taxed on the 70K loss. (I'm not a tax advisor - but seek advise - most give you a free consult) Try to negotiate with the bank - a lot of times they will be able to arrange a payment schedule that is within your budget - and because you've communicated with them every step of the way there is no drama. Now, if you don't communicate, don't pay, and try to work it out "later" good luck... they don't look too kindly on that. -Maresa|||If you can find a buyer, you can try to negotiate a "short sale" with your lender. There is a lot of that going on right now. If you are having trouble paying the mortgage, work with the lender's customer service people to see how they can help you out. It is a no win situation for both you and the lender, so ti is to their benefit to work with you as much as possible.|||In California if the lender takes a loss when they sell the house you DO NOT own them any money IF the loan was to buy the house. If the loan was a refinance, they can get a deficiency judgement for their loss.

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