Legal Question in Real Estate Law in California

Re: One loan on Home mortgage

Partially correct. There are two forms of foreclosure. Non-Judicial Foreclosure, and Judicial Foreclosure. Approximately 90% of residential foreclosures are Non-Judicial meaning the foreclosure is done by a third-party, with no court involvement. If your lender pursues Non-Judicial Foreclosure, then once its over, they cannot sue you unless you willfully destroy the property before you leave. Alternatively, the lender can chose to actually file a lawsuit to foreclose the property - this is Judicial Foreclosure. This is extremely rare in the run-of-the-mill residential foreclosure, and even if they do a Judicial Foreclosure, they can still only sue you that one time. Odds are that so long as you don't trash the house before you go, the lender will foreclose Non-Judicially and you will probably never hear from them again.

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Re: One loan on Home mortgage

You are statistically less at risk if your borrowing situation is simple. However, there is no such one-loan vs. multiple loans rule. The problem with multiple loans is this: When the holder of a first deed of trust forecloses and the holder of the second is not also paid out of the proceeds because the sale didn't produce enough cash, then the holder of the second becomes an unsecured lender and, because it cannot foreclose (there being nothing left), it is legally empowered to seek other remedies, including suit against the borrower. It is no longer limited to foreclosure on the collateral. Such creditors are called "sold-out juniors" and are usually hopping mad and are likely to be most aggressive.

You are pretty much right that the holder of a purchase-money note and first deed of trust can't sue the borrower for a deficiency left after the collateral is sold. The exceptions involve cases where there are grounds outside the loan obligation itself, such as loan-application fraud or "waste."

In the context of lender suits against borrowers, "waste" means negligent or malicious failure to take care of the collateral, such as not calling a plumber when the upstairs plumbing begins to leak, resulting in serious structural damage to the house, or logging off all the shade trees on the property and selling them to the sawmill two weeks before the foreclosure sale. I definetly do not recommend firing parting shots at the mortgage man.

Re: One loan on Home mortgage

No...that is an over-simplification. If you have one loan and it is the original loan (and not a refinance) then you are protected from a suit by a lender for a deficiency, so long as that loan was not procured by fraud. Fraud trumps everything; fraud would include lies and misstatements in the loan application, inflating income, claiming you were going to reside in the house when you really intended to rent it out, getting unauthorized "cash back" at close of escrow, etc.

Re: One loan on Home mortgage

No...that is an over-simplification. If you have one loan and it is the original loan (and not a refinance) then you are protected from a suit by a lender for a deficiency, so long as that loan was not procured by fraud. Fraud trumps everything; fraud would include lies and misstatements in the loan application, inflating income, claiming you were going to reside in the house when you really intended to rent it out, getting unauthorized "cash back" at close of escrow, etc.