Legal Question in Real Estate Law in California

Re: 2nd and 3 mortgages

Mr. Whipple has given you a very thorough answer. Follow his advice!

Based on your very sparse facts, I agree that a consultation with a bankruptcy attorney, familiar in this area, is where to start.

Re: 2nd and 3 mortgages

What will happen depends upon whether the lenders would have recourse to you beyond the collateral, and whether you have assets they can reach by obtaining a judgment against you.

As you probably know, there are very tight limits on lenders going after a so-called default judgment after a foreclosure that doesn't fully pay them off. Generally, there is no recourse via a deficiency judgment after a foreclosure by trustee's sale under a power of sale in a deed of trust, or when the loan in question is a purchase-money loan. There are a few exceptions, but usually the only lenders that can attack the borrower directly are (a) those who foreclose in court (judicial foreclosure) on a non-purchase-money loan, or (b) so-called "sold-out juniors" who lose their collateral, and hence their opportunity to foreclose, when someone higher up the food chain forecloses first. For example, if your 2nd foreclosed, it would sell subject to the first, but the 3rd would lose its collateral and could sue you on a now-unsecured loan.

Judicial foreclosures and suits over a property that is $180,000 under water will no doubt depend upon the amount and quality of other assets you have and the voracity of the particular lenders.

You might want to consider consulting with a bankruptcy attorney. This does not mean I think you'll necessarily be faced with filing, but this is the type of attorney that might have the best experience to advise you. If you do intervew some bankruptcy attorneys, be sure to ask about their experience in advising on and defending lender suits for deficiencies.