Legal Question in Real Estate Law in California

The foreclosure of the first loan wipes out the lien, but not the debt, of the junior mortgages. Therefore if the first position lender forecloses, you will be in default under the second and third mortgages. Once in default, the junior lenders can sue you for non-payment.

Attorney Schomer is correct, however, with one possible exception. If the second lender (not the pool loan, as that is clearly not purchase money, and is subject to a deficiency if the first or second forecloses) was a purchase money loan - in other words if it is a loan you received when you bought the house, and the money from that loan was used to buy the house, then they MAY be barred from suing you. It is impossible for any of us to give you a concrete legal opinion without being retained and reviewing your circumstances fully, but it is safe to say that unless the pool loan lender forecloses non-judicially and takes the house, you will continue to be liable for it, and possibly even the second loan after the foreclosure.

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