Legal Question in Real Estate Law in California
If you have a current mortgage that is an 80/20 combo purchase money first and second if you stop making payments on the second but not the first what legal action can the second take against you, if any?
2 Answers from Attorneys
In general, any holder of a promissory note secured by your real property can foreclose, whether the note being foreclosed is in first, last, or any other position. If the holder of a junior obligation forecloses, the buyer at foreclosure acquires the property "subject to" all the senior obligations. The borrower/debtor will not be subject to any attempt to get personal recourse for a deficiency as long as the loan or loans were purchase money for an owner-occupied home. There could be an exception if there are unusual circumstances like loan-application fraud or serious under-maintenance of the property.