Legal Question in Real Estate Law in California

If neither you nor your brother are borrowers on the loan, and did not sign any guarantees or any other amendments to the loan documents, then you are almost certainly not going to be liable in the event of a foreclosure. That being said, you need to be absolutely sure that neither of you ever signed the original loan documents, any guarantees or any other modification or amendment to the documents, or you could be liable. Just by virtue of being in the chain of title, however, does not create any financial or credit liabilty for the mortgage.

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Basically, the estate of a decedent is liable for the decedent's debts, such as the mortgage on his house. However,California has several laws limiting a lender's recourse on most home loans to the collateral itself, so the lender is usually limited to foreclosing and being satisfied with the results.

The few exceptions would involve instances where there was a second mortgage that became unsecured due to loss of the collateral upon a foreclosure by the lender in first position, or where a lender decided for some reason to forego foreclosure by trustee's sale and pursue judicial (court) foreclosure. Even then, there can be no deficiency judgment when the loan in question is a purchase-money first mortgage on a property which the borrower intends to occupy as his primary residence.

I think a violation of the loan terms may have occurred when the two sons were placed on title, unless the lender gave permission. Most loans have due-on-sale clauses which are triggered by making someone else a joint tenant, whether as a gift or for value received. This would generally allow the lender to accelerate the maturity of the loan, but I don't believe it would affect the lender's rights in a foreclosure.

I assume without really knowing that it was unnecessary to probate the estate, or at least that the house passed to the brothers without the necessity of probate. You should make sure the lender knows where to send notices. You should also be aware that several events here will or may affect your tax liability, including receiving a share of title to the property, the father's death, and a foreclosure. Consult a tax expert.