thanks and good luck
In a successful Short Sale the lender agrees to take less than what is owed, so a deficiency is not possible.
There a number of ways a lender may or may not be able to go after personal assets via a deficiency judgment after a foreclosure, but it makes a difference on how the property is foreclosed.
For a Owner-Occupied where:
1) A lender made a purchase money (non-recourse) loan, then NO deficiency judgment can be attempted. If a senior lienholder forecloses on the property, the "wiped out" junior lienholder who no longer has a secured note may not sue on this promissory note.
2) A Seller financed a purchase money loan (non-recourse), NO deficiency judgment can be attempted (non-recourse loan). If a senior lienholder forecloses on the property, the "wiped out" junior lienholder who no longer has a secured note may not sue on this promissory note
3) You as the owner of the property, refinanced the property (recourse loan), then a deficiency judgment CAN be attempted if a judicial foreclosure was used (as opposed to a Trustee Sale). This is NOT allowed under a trustee sale foreclosure. HOWEVER, if a senior lienholder forecloses on the property, the "wiped out" junior lienholder who no longer has a secured note MAY SUE on this promissory note.
IN ANY CASE, A REAL ESTATE LAWYER SHOULD REVIEW YOUR SITUATION!
If you would like more information on this subject I have a few documents you may find useful, just email me offline and I'll send them to you.
California is a non-recourse state...so if the home is sold in a trustee's sale, there is no recourse for any mortgages. The exception is if they decide to foreclose through a court action (which really rarely happens).
In a short sale....before we accept the terms from the bank...we need to make sure they are releasing all interest in the property. They do this via the approval letter and if we don't see that clause, then we don't go through with the short sale. So this way you are protected. I actually show my sellers the exact paragraph where the bank releases the seller.
Additionally...the Federal Governement and California State Legislature have both passed laws which prevent lenders from seeking a deficiency judgement on your primary residence after a foreclosure. This is a short term break from the normal laws and was included in the Mortgage Relief Act of 2008.
I would be happy to talk with you about your specific situation if that would be helpful? If so...send me a private email and we can chat a bit more.
If it is your original mortgage for the purchase of your home, it is non recourse and the lender CAN NOT get a deficiency judgement against you. That is the law in California. Even if it's a refi the chance of the lender going for a deficiency judgement is infinitely small as they have to waive their right to a trustee sale and file a lawsuit against you to recover the property. It takes far longer for them to get the property back that way and gives you additional rights of redemption you don't have with a trustee sale.
Hope this clears it up for you.