Legal Question in Real Estate Law in California

It depends. As a general rule, In California if a lender forecloses on a purchase-money first trust deed, they cannot seek a deficiency judgment against you; hence they cannot seek to levy on any of your other property, whether real or personal. Under certain circumstances, however (in most instances where there is a second trust deed that is not a purchase money loan), the junior lien holder is known as a "sold-out junior." While the security for that type of debt is wipped out by a foreclosure of the first trust deed, you still owe the debt, and the sold out junior can sue you for the value of their "sold out" loan. If that occurs, and the second obtains a judgment against you, they can record liens against your real and personal property, garnish your wages or levy upon your bank accounts, among other things. In the context of a sold-out junior, you will have plenty of notice that they are seeking to lien your property, because they must first file a lawsuit and obtain a judgment against you before they can do anything to any of your property.

Any creditor that sues and obtains a judgment against you can then levy on all assets and income you have. If you get sued, defend it or negotiate a settlement or file BK if appropriate.

A residential mortgage lender cannot sue and obtain a judgment against you if the loan is a purchase money first, and suits are quite uncommon on other types of loans, since foreclosure by trustee sale is quicker and easier, and usually cheaper. After a trustee sale, the foreclosing lender cannot go after your other property to collect a deficit in hte sale proceeds.

Suits and deficiency judgments are possible with non-pruchase-money loans and where there has been fraud on a loan application or failure to take reasonable care of the collateral property.

Amazing that this many attorneys would wander off on tangents instead of answering your simple question. Although pretty much everything they have said is correct, it doesn't seem to address what you want to know. You have asked what happens when a single mortgage is foreclosed on. If you have a first and a second, or a first and a home equity loan, or anything like that, the situation becomes complicated. If you just have one loan and the lender forecloses, it is simple. There are two ways to foreclose in California - 1) a trustee's sale; and 2) a lawsuit on the debt with a cause of action for foreclosure. What most people think of as a "foreclosure" is actually the trustee's sale. This involves no court action, can be completed in a few months from the first notice of default to the final sale, and is pretty inexpensive. Litigation on the debt is long, slow, expensive, and leaves the court sale subject to many more challenges even after it is completed. The trustee's sale is nearly immune from attack once it is completed. Because the trustee's sale is so favorable to the lender, it comes with a catch. If you are a lender and foreclose by trustee's sale you must take what you get and write off the rest of the debt. The borrower walks away. If you go to the trouble and expense of a foreclosure lawsuit, you get a judgment for the balance due. Because of the time, trouble and expense of the lawsuit, lenders almost never go that route. But that is the only way they could come after any other assets or property you have. If they use the trustee's sale option, the "one form of action rule" prevents them from doing anything else to collect against you.

Answering your question with any specificity is going to require a detailed analysis of the facts. If you contacted me with the question, I would want to know the following:

1. What were the circumstances surrounding the loan at inception? In other words, would it come within the purchase money anti deficiency protection of Code of Civil Procedure section 580b?

2. Was the original loan refinanced? If so, this would take it out of the ambit of Code of Civil Procedure section 580b, and purchase money anti deficiency protection would be lost.

3. Are there other encumbrances on the property, junior or senior? Who is the holder of these encumbrances?