Legal Question in Real Estate Law in California

Although your message is unclear, it seems you are saying you had a first and second mortgage and the first foreclosed, leaving the second as a "sold out junior loan." If that is correct, you most likely have no choice but to pay or file for bankruptcy if you qualify. A sold out junior becomes effectively like a credit card debt - you still owe it; the security is just gone. The only possible source of relief other than bankruptcy is if the second was a purchase money loan on your principal residence. That means the loan must have been made at the time you purchased the property, been used entirely for the purchase transaction, must not have been used to pay down other debts or anything else unrelated to the actual acquisition, and must not have been refinanced. If the second fits ALL those criteria, they have been collecting illegally and I would be happy to take your case against them. If it does not meet all those criteria, your options are pay or bankruptcy if you qualify.

The other exception would be if the same lender held both the first and the second, at the time of foreclosure. In that situation, the second would not be a frozen out junior lienholder who could sue directly on the note, and would be barred from going after you by Code of Civil Procedure section 590d.

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