Legal Question in Real Estate Law in California

There is a loop-hole of sorts in the law regarding publication of the sale. Only the original sale date must be noticed and published. If the sale is postponed, no publication or notice of the subsequent sale date is required. Since the five-days-before cut off for the right of redemption does not reset with a postponement, there is no legal reason to give notice to the owner/borrower either. That is why so many people are caught off guard. As for "getting rid of" your junior lender, that will not be easy. As a sold out junior, they are in the same place as a credit card company or any other creditor. Because you refinanced, you have no anti-deficiency protections. If you can't pay them off or negotiate something, your only source of protection is the Bankruptcy Code.

The only controversy I know of relating to your facts is that some California appellate courts have held that refinancing a purchase-money loan with the same lender does not destroy the purchase-money character of the loan; since it is only a juggling of the terms of an existing purchase-money loan it is not a true refinancing with payoff of the original loan from the proceeds of a new loan, etc. Whether this interpretation would be applied in your case is a moot question, since your problem is with the lender who supplied what was your second, an event unrelated to the refi of the first. This lender is now a general unsecured creditor, having lost its collateral through no fault or act of its own. As such, your second lender can pursue any lawful means of bill collection against you, without regard to the antideficiency laws, including bringing suit. This will not necessarily happen; I know of instances where borrowers have been left alone by their "sold-out junior" creditors, but you are at risk of being pursued and sued. As Mr. McCormick points out, your alternatives if pursued are negotiation, payment in full, or filing bankruptcy.

You are going to have to at least speak to an attorney familiar with this area of the law. You will have to provide more factual detail. It is not clear which loan was refinanced, which lender held which deed of trust, and which lender foreclosed.