I have both purchase money 1st and 2nd loans on a condo in CA. Combined, they amount to 100% financing. If I sell now (1 year later after the purchase) at a lower price, is the lender obligated to accept that amount as full payment? Does it adversely affect my credit?
Your question is probably one that many people are having as the real estate boom market begins to fade in some parts of the country and borrowers start examining their options. The bottom line is that the answer is "no." The lender will not be obligated to take what you get when you sell the property and consider your loans paid in full. The amount on the promissory notes you signed (plus any accrued interest and fees and minus any payments you've made) is what you owe. Even if you end up not paying and the lender has to foreclose on the mortgages, the lender would be entitled to seek a deficiency judgment for the difference between the amount the property sells for at the foreclosure sale and the amount you owe. The lender could seek to collect on that deficiency judgment by going against any other non-exempt assets you have (bank accounts, other real estate, part of your wages).
If you seek to sell the property on your own and you can't get enough in the sale to pay off the loans, you will literally have to bring money of your own to the closing to pay off the loans. Otherwise, you can't give good title to the property to the new buyers and the sale can't go through.
What are your options? Can you refinance and get lower payments? Can you put sweat equity into the property to raise its value by making improvements that don't cost you much money? Can you rent the place for enough to make the mortgage payments and then find a cheaper place to live temporarily? Can you find someone who will purchase the property for what is owed against it?
Talk to your lender. The lender is undoubtedly knowledgeable about the alternatives that may be available to you. It's not good for you or the lender for the deal to go sour. Work together to find a solution.
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Your question is probably one that many people are having as the real estate boom market begins to fade in some parts of the country and borrowers start examining their options. The bottom line is that the answer is "no." The lender will not be obligated to take what you get when you sell the property and consider your loans paid in full. The amount on the 