Legal Question in Real Estate Law in California

Yes, but only if they elect to file a lawsuit to enforce the debt, and foreclose as part of the lawsuit. If they do the standard "foreclosure" which does not involve filing a lawsuit (and is technically called a Trustee's Sale), they are prohibited from taking any further action to collect any deficiency. If there is going to be a major shortfall, however, and you have other assets to go after that would satisfy the debt, there is the possibility that they would file a judicial foreclosure action.

Foreclosure by trustee's sale is the lender's usual choice, rather than going to court for a judicial foreclosure and deficiency judgment. Your risk of the lender choosing the deficiency judgment path is increased to some extent by each and any of the following factors:

(1) You seem to the lender to have plenty of easily-identified assets they can grab after getting a judgment;

(2) Your loan application seems to them, upon review, to have been a little less than completely honest about your income, net worth, etc.

(3) The loss in value of the property is partly your fault, i.e., you damaged it, or didn't do needed repairs, or failed to pay the property taxes.

(4) The lender (current holder of the note) is an individual, a trust, a small partnership, etc. that needs the money badly, rather than a big financial institution.