Legal Question in Administrative Law in California

Re: foreclosure

Most often, there is no direct connection. Mortgages and deeds of trust are collateralized by the properties they were used to buy, or which were offered as collateral for a refinancing.

There are exceptions. First, in commercial and business lending, it is rather common for lenders to "cross collateralize" loans and to "cross-default" them, so that a breach of one loan agreement triggers a breach of others.

In addition, some loans may go into default if you commit an act of insolvency or bankruptcy.

Further, some loans may contain covenants requiring you to maintain a certain level of liquidity or credit rating.

A default and foreclosure that doesn't pay off the indebtedness can in some instances give the lender a right to seek a so-called deficiency judgment for the balance due after the foreclosure sale. If unpaid, the deficiency judgment would probably become a lien against your other properties.

Having said all this scary stuff, I should close by saying that in more than 50% of situations there is nothing to fear. Nevertheless, you probably should have a good real estate finance lawyer look over your possible exposure.

Finally, I guess I should add that if there is anything fraudulent about any of your deals, e.g., stretched truth on your loan applications, you are much more likely to be in hot water than if everything is squeaky clean.