If my property forecloses and I have a second refinance mortgage, can I be sued for the balance?

UPDATED: Dec 30, 2011

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If my property forecloses and I have a second refinance mortgage, can I be sued for the balance?

I live in CA.

Asked on December 30, 2011 under Real Estate Law, California


FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

Since the second trust deed is not part of the purchase money loan when you acquired the property, there is a good chance that the lender in second position on your home can bring an action against you for a deficiency balance on your loan.

Rather than letting the home go in foreclosure, I suggest that you try and short sale the home where the second trust deed and presumably the first trust deed are refinances. The reason is that in July 2011, California had a statute take effect that if a lender receives any money on a refinace, the lender cannot sue the owner of the home for any deficiency concerning the loan.


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