Legal Question in Wills and Trusts in California
I bought a house with an 80/20 loan where both loans are from the same lender. Both contracts say "purchase money" on them. I can no longer afford the payments and cannot refi because I am upside down on mortgage. If I cannot short sale and it forecloses, can the 80 loan foreclose as it's one action law in California and then the 20 loan sue me because of the one act law in California?
3 Answers from Attorneys
No - Based on the way you drafted the facts, they both are purchase money loans and therefore non-recourse in California.
Ms. Mains is correct. If they were both purchase money, and you never refinanced, they are non-recourse by law.
This is not a probate question. The lender that forecloses nonjudicially by way of a trustee's sale is prohibited from suing you for a deficiency judgment pursuant to the terms of Code of Civil Procedure section 580d.
The second would be able to sue you as a frozen out junior lienholder, but would be barred from suing you under the terms of Code of Civil Procedure sectoin 580b, provided that the loan was purchase money.
Neither of these doctrines have anything to do with the "one action rule."
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