Legal Question in Real Estate Law in California

Re: Foreclosure & Savings

If there's only a first deed of trust, then the lender will probably do a nonjudicial foreclosure. That means it could obtain possession of the house, but can't seek any money from the borrowers.

If there's a second deed of trust, however, that might be a different issue. If that's the case, speak with an attorney in your area about how to protect yourselves.

Re: Foreclosure & Savings

It depends; if your loan is a "purchase money" loan, i.e., obtained at the time you purchased the property, then the lender's only option is to foreclose on the property and take it back. If, however, the loan was one which was taken out later than the purchase, such as a refinance, then the lender has the option of foreclosing by way of a trustee's sale or a judicial foreclosure and with the latter it can seek a deficiency. Which option the lender would choose in that instance depends upon the amount of the loss they face and the ability you have to satisfy any judgment; it is a "judgment call" on their part. Also, remember if there is any fraud in connection with the making of the loan, such as false financial data submitted in order to get the loan, they can seek a deficiency also.