Legal Question in Real Estate Law in California

The statute of limitations is of little concern to the holder of a second deed of trust, as long as the holder of the first is not going to foreclose, which would cancel the security of the second lender leaving them unsecured. This is because the right of foreclosure by trustee's sale is not affected by the statute of limitations. Only the right to sue on the debt in court and/or conduct a judicial foreclosure is cut off by the running of the statute.

So it really boils down to how much equity you have in the property and how at-risk the lender is of not being able to collect by foreclosing. If the statute has run out and there isn't enough equity in the property for them to collect what is owed, it would be smart of them to take what they can get and go away, since there is no way they could make up the deficiency. If, however, there is plenty of equity, they couldn't care less about the statute of limitations; they can still foreclose and get their money. That would make them much less interested in cutting a deal.

Bottom line: Whether the lender will cut a deal or not is pretty much tied to the equity they could reach upon foreclosure. If there is equity, they don't care about the statute and it doesn't help you. You should do what it takes to keep them from foreclosing if at all possible. If there is not any or much equity for the second lender to reach, then the LAST thing you would want to do is restart the statute of limitations, which making a payment does, unless the payment is a full settlement of the debt.