You may want to consult with an attorney for legal advice. However, California is a one-action state. Generally speaking, it means that if they pursue a foreclosure via trustee sale, only one form of action for recovery of the debt. I suggest that you look into a short sale if you are worried about that, because we have SB458 in California. If lender accepts a short sale (1st, 2nd loans too), they cannot pursue borrower for any deficiency. Feel free to contact me any time if you're interested. Thanks.
Sara Mehrpouyan CDPE
Specializing in Short Sale & Foreclosure
Dre License #01712757
The only thing you have cause for concern is the Mortgage Debt Forgiveness Act is not on your side. You will be taxed by the IRS at your tax rate for the negative balance forgiven.
Please do a short sale if you're upside down. If you let the home go to total foreclosure, the bank CAN issue a deficiency judgment on you.
Shoot me an email directly if you want to talk about this some more or if you'd like me to look into it for you, I don't look back on this same Trulia thread for answers posted after mine. I close short sales currently within a 300mi radius of where I live.
Realtor Since 1996
Main Street Realtor
Anti-deficiency statutes generally don't apply to investment property. Unless negotiated away through the use of a short sale, a lender typically has the right to pursue a deficiency judgement against a borrower where the property is NOT their primary residence. I highly recommend consulting with an attorney--an examination of all the paperwork is essential as foreclosure laws vary from state to state.
Diane Wheatley, Broker
You can also find more short sale information on our website. Http://www.realestateforsantaclarita.com