Legal Question in Real Estate Law in California

You need to consult with an attorney. In this case the advice you may receive will be worth everything you pay for it.

If the lender forecloses by way of trustee's sale, in what is known as a nonjudicial foreclosure sale, you will not have any postsale liability. Lenders are prohibited in California from seeking deficiency judgments after a trustee's sale, pursuant to Code of Civil Procedure section 580d.

The foreclosure, however, will affect your credit, and may have tax consequences for you.

Is the property now "under water?" If it was free and clear three years ago, you should look at whether you have equity enough to (a) protect, or (b) there will be no deficiency after the foreclosure. Further, if the deficiency is likely to be small, the likelihood of a judicial foreclosure at which the lender could seek a money judgment is correspondingly minuscule.