Legal Question in Real Estate Law in California

Re: Foreclosure

As to the "deed in lieu" part of your question, this is an option, but generally requires the lender's agreement to accept a deed rather than go through with a trustee's sale. If this option is appealing to you, discuss it with the lender.

A junior lender, if not paid off from the proceeds of the senior lender's foreclosure sale, loses its collateral and becomes an unsecured creditor of the borrower - and can and probably will go after you if you have other assets.

If the HOA is owed a significant amount, it too will likely go after a judgment.

Re: Foreclosure

It is very difficult to accomplish a deed in lieu of foreclosure (DIL), which requires the consent of the lender accepting the DIL, when there are multiple loans secured by the same property. The first priority lender has no incentive to accept a DIL because a DIL does not eliminate the second priority lien. Foreclosure does. The second priority lender would have to bring the first loan current and keep making payments and paying taxes and insurance after accepting the DIL in order to prevent foreclosure by the first lienholder. Unless there is a whole lot of equity in the property, the second lienholder may not want to throw good money after bad.