Legal Question in Real Estate Law in California

Since the first loan foreclosed, the second loan is wiped out. However, the lender can go after you personally for its loss, such as garnishing your wages, etc.

Mr. Shen is incorrect if the first and second are held by the same lender. The sold-out junior lienholder exception does not apply where a single lender holds both the junior and senior liens. (Simon v. Superior Court (1992) 4 Cal.App.4th 63, 76-77.)

I agree with Mr. Roach. The principle on which the Simon case was decided is that a second lender is entitled to sue for a deficiency only if (among other things) it was not at fault for the loss of its collateral. In Simon and your cases, the loss of collateral (your house) was caused by the lender's own actions.

Your facts are a little abbreviated and hence not entirely clear, but it might also be helpful for me to point out that there is a growing body of case law suggesting that when a loan is refinanced by the same lender, without cash out, for the sole or primary purpose of giving the borrower a lower interest rate, the loan will not lose its purchase-money character. I would have to do some current research to see where this trend of decisions has gone in the last couple of years.