Legal Question in Real Estate Law in California

It depends on what the loan was for. Many exceptions as to whether it is recourse or non-recourse.

Many loans are "non-recourse" in many situations. "Non recourse" just means that for some reason the lender cannot sue the debtor personally for the balance due. For example, well established parnerships may be able to take out a loan secured by the assets of the partnership, with the lender agreeing to "no recourse" against the partners personal assets, which would not be the case in the absence of a "no recourse" agreement. What I think you are asking about, however, is California's anti-deficiency statute. That law provides that if a lender makes a "purchase money" loan, which is one that is made at the time the property is bought and used entirely for the purchase (not used in part to pay down consumer debt to qualify for example), and the purchase money loan is for the borrower's residence, the lender is limited to holding a trustees sale foreclosure in the event of default. The lender cannot sue on the debt and judicially foreclose, to obtain a judgment for any deficiency. This only applies to purchase money loans. Once you refinance this protection is lost. It also doesn't apply to loans secured by mortgages but that are used for other purposes, not even if the money is put back into the house for repairs or improvements.