In California, if the loan(s) are purchase money loans, then its a "single action" state. The lender can make no further claim on the borrower.
If the borrower has taken out home equity, either by refinancing or by a home equity loan, there is the possibility the lender can start a collections action against the borrower for the "cash out" money.
In addition, there are potentially very serious tax consequences, depending on the nature of the loans, if its principal residence or not, and if the borrower has take cash out.
We have an accountant and lawyer available for consultations.
We take our clients to see the accountant & lawyer. This mitigates our potential liability if there are tax consequences, and we missed them.
This has become a very nasty and complex area, with potentially horrific consequences for investors (having losses on foreclosures taxed as income), and the clients need to obtain professional advice about situation, including a possible bankruptcy.
Please protect yourself. Take your client to an accountant and a lawyer.