Legal Question in Real Estate Law in California

Re: foreclosure

Possibly; if both the first and the second were created at the time you first bought the property, then no. But, if either of these loans is a refinance, or if the second loan was made after your purchase and not at the time of purchase, then the second could seek to recover a deficiency judgment from you. If either lender carries out a trustee's sale then that lender cannot seek further monies from you. The most likely scenario is this: the first loan will carry out a trustee's sale and the second lender will allow itself to be extinguished because there is no equity to protect by doing its own foreclosure and then, IF the second is not purchase money, they can seek to recover from you as a "sold out junior lienholder."

Re: foreclosure

The same question was asked about two weeks ago. In Californioa, if the lender has a private foreclosure of the property, which is what occurs the vast majority of times, then they have agreed that they will not go after you for any difference between the foreclosure sales price and the amount of the loans. When the first forecloses, the lender holding the second is wiped out and also can not go after you for any lmoney. You do, however, have a foreclosure listed on your credit record so future loans and credit will be more difficult to obtain and will be at a higher interest rate.

Look through prior answers on this site as to what options you might have to avoid foreclosure. Depending on the exact terms of your loan, the interest rate does not automatically go up just because of the passage of time. It may never go above the current 8.9%

Good luck.

Re: foreclosure

Both Ms. Deming and Mr. Shers have given you comprehensive answers.

I also second Mr. Shers' suggestion for you to read other foreclosure answers, since, with the collapse of the mortgage markets, many people are in the same "boat" as you.