Legal Question in Real Estate Law in California

No, you do not have to worry about the lender going after your own house. If your son defaults on a loan which was used entlrely to purchase the home [not refinance, line of credit, buy a car too], then the home is security for the loan and teh bank can go against the mortgaged home but no where else. It would, however, effect your credit rating. You might be able to get the bank to not report the default as to your husband.

I disagree with Mr. Shers. When your husband cosigned the promissory note, he became a guarantor (also called a surety.) The distinction between sureties and guarantors was abolished by statute in 1939.

A property-drafted guaranty can give the lender deficiency judgment recourse against a third party when the borrower (your son) is protected by California's anti-deficiency laws. A guarantor becomes liable on the guaranteed obligation upon the principal obligor's (your son) default and without prior demand or notice. (Civil Code, sect. 2807.)

Generally, guarantors can waive the benefits of California's anti-deficiency laws. (Civ. Code, sect. 2856.) Historically, a lender can enforce a guarantor's liability without first resorting to the real property security. However, when a lender first forecloses nonjudicially against the principal, this destroys the guarantor's right of subrogation against the principal. (Union Bank v. Gradsky (1968) 265 Cal.App.2d 40.)

Again, however, a guarantor can waive this defense. This type of waiver is commonly called a "Gradsky" waiver. Review of the paperwork that your husband signed is important to determine whether he made such a waiver.

If he did make the waiver, or the lender pursues its guarantee first, the lender can get a judgment against your husband. The lender may pursue your house to satisfy this judgment, depending on how title is held.