Legal Question in Real Estate Law in California

Re: Foreclosure by 2nd mortgage

Yes your junior lien holder can bring forclosure proceedings subject to the first mortgage. A deficiency judgment can be obtained against you if it was a (recourse) non purchase money mortgage (e.g. home equity loan). The problem with your your protected equity assumption is that in the present soft market even if there was any equity (which according to your facts there is none) it would be lost at the trustee sale. Subject to your cashflow sufficiency, I can probably save your home in a chapter 13 bankruptcy. Call if you are in LA county.

Re: Foreclosure by 2nd mortgage

Your homestead exemption protects some of the equity in your property during bankruptcy and from judgment creditors. It does not protect you from voluntary liens like a deed of trust. If you do not pay the second mortgage lender, they can and probably will foreclose on the property.

You may qualify for Chapter 7 to get rid of the credit card debt. If you are behind on your mortgage, you might also need to consider a Chapter 13 bankruptcy to get caught up. You should seem a consultation with a local bankruptcy attorney right away.

Re: Foreclosure by 2nd mortgage

I have a section about this on my web page. This is a brief explanation: Yes, the second can foreclose. If the second forecloses, you will probably lose all your equity in your home. Given your situation, there is a stong possibility that the second will not foreclose because whoever buys the second will have to pay off the first or the first will also foreclose, causing the owner of the second to lose money. It is more likely that the second will notify the first that you are in default and then the first will foreclose. The second will then get any overbid made above the amount owed on the first. Also, your situation will depend on whether you have refinanced or whether you have obtained the second at a time after the purchase date. You could owe a deficiency to the second if the first forecloses first.