Legal Question in Real Estate Law in California

Re: What happens to a second mortgage that is non recouse after foreclosure

Yes. Records are forever. This will show as a foreclosure/charge off. But, they are dropped from view off your credit reports after about 10 years.

Re: What happens to a second mortgage that is non recouse after foreclosure

First, I'd advise that you make very sure that the loan is truly non-recourse, and that you understand why. Is it because someone has advised you that under one or another of California's antideficiency statutes you are protected from suit? Or does the note specifically state that the holder shall have no recourse to the maker (or words to that effect)?

Then, I'd consider whether there is any possibility that you can be blind-sided by an unhappy lender by an action that isn't specifically on the note. This could perhaps be a suit for loan-application fraud, or for so-called "waste" of the collateral - this could be something you did or failed to do that reduced the value of the property, like failing to fix a leaky pipe or logging off the landscape trees and selling them to the sawmill.

You are probably OK on both the note and the danger of collateral suits, but it pays to be alert. Mr. Nelson is right about the credit situation.