Legal Question in Real Estate Law in California

Re: Real estate

From the information you have provided, it will be very difficult to give you an answer that makes much sense. First, in California it is very rare that a lender would "cross-collateralize" the two homes. In other words, if you have a mortgage on home one, it is very unlikely that the same mortgage is extended to the second property. As such, if the lender pursues non-judicial foreclosure on house 1, its not likely house 2 is in any jeopardy. There are a lot of variables - too many to be answered here. I'd be glad to discuss this with you if you want to contact me off the forum.

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Re: Real estate

The second home is probably not in danger. Danger could arise in the following (unlikely) ways: (1) if the loans are cross-collateralized so that the after-acquired property is also collateral for the first; (2) if the loans are cross-defaulted, so that a default on the first-acquired property constitutes a default on the loan on the second house. As Mr. Gibbs said, linking home loans is rare, but who knows? Did you use the same lender for each? Just read your loan documents carefully to see if the loan on the more recent purchase makes and reference to the loan you may default on.

There is also a slight danger that the lender on the defaulted property will be able to get a deficiency judgment, which would then probably become a judgment lien (if not paid) on the other property. Deficiency judgments cannot be had if the foreclosure is by trustee sale or if the loan being foreclosed was purchase money.

There is one remaining possible source of danger. If you told any fibs on either loan application, and someone gets stirred up enough to re-read them and notices, for example, that you misrepresented which house was going to be your primary residence, that would perhaps be an additional ground for suit, judgment and a lien on the 2nd property.