Legal Question in Securities Law in California

I assume the loan encumbers both owners' interests in the house. It is possible, although unusual, to have a loan against only one of two co-owners' interests.

One financial consequence will be that your credit rating will take a steep plunge, often around 200 FICO points, depending on where you start from. The time from cessation of payments to foreclosure sale varies a lot, but you might expect around six months including all time periods involved - the lender to decide you are in default, the waiting period between notice of default and notice of sale, then from notice of sale to actual sale.

The laws requiring home lenders to accept the collateral as their recourse and against judgments for deficiencies will probably protect both of you from any suits for money damages. There could be some exposure to a lawsuit if any of the following is/are true: There was loan-application fraud. This is a refinancing and/or there is a second deed of trust on the property. The property has been damaged or allowed to deteriorate in a way that affected its collateral value.

Otherwise, the credit damage is the main thing.