Legal Question in Real Estate Law in California

Re: loan default + lien

Well, I'd say this is more of a financial or business problem than legal. From a legal standpoint, you will be foreclosed upon and thus lose the property unless you cure the default in a legally-satisfacory way. You may also have to satisfy the other lien, although it doesn't sound as though that lien holder is in a hurry to foreclose by itself.

With the set of 'givens' imposed by your preference not to sell now nor to lose the property, and the legal reality of an impending foreclosure, your business/financial options are somewhat limited. One possibility is to come up with a wad of cash from some other source and pay off the arrearages. This may be out of the question; you've probably exhausted resources.

The remaining obvious possibility is to refinance the property, either by a work-out with the current lender (sounds like this is what you're trying to do currently), or go to a different lender.

Whether going to a different lender would be workable depends upon how much net equity you have in the property, your credit rating and income, cash flow from the property, and other economic factors.

Maybe you could consider taking on a partner or selling a partial interest to raise cash, half a loaf being better than none (sometimes).