Legal Question in Real Estate Law in California
Is there any reason that a bank would foreclose under a SECOND deed of trust when they also own the FIRST deed of trust in a foreclosure? I've stopped paying on both, but I can't understand why they would foreclose on the second instead of the first. Would a deficiency judgment be permitted? In the loan documents there are dragnet clauses connecting the loans.
2 Answers from Attorneys
There are a number of possible reasons, but without a great deal more information it would be total guess work. Under current law, I know of no reason the bank would do so that would affect your rights or your exposure to a deficiency judgment.
Lenders may depend upon computer programs and the like, more than careful hands-on human analysis, to identify loans that are seriously delinquent and should be foreclosed. Maybe your second is 11 months delinquent and your first only five months, so the computer identified it as meeting the requirements for filing and serving a Notice of Default. Or maybe there is something particular in the terms of the second that gives it a shorter fuse. Who knows?.In any event, the result will be the same.
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