Tara-Nicholle got it spot on regarding the fact that California is a one-action state. The lender can either foreclose through a Trustee Sale (with no additional recourse against you) or through a Judicial Foreclosure (which allows for a deficiency judgment). Rarely, if ever, will you see a Judicial Foreclosure in California.
Regarding the junior liens, I am seeing more and more people being pursued for the balances owed (even when the loan was purchase money). The reason for this is two-fold -
1. Lenders are selling the bad debt to specialized collection companies. They are paying almost nothing for the debt, but are very aggressive in their collection efforts.
2. Private mortgage insurance companies are also pursuing their rights under the law to collect against the balances they insured.
If you are notified about such a collection action, you need to contact an attorney immediately. They will be the only ones who can tell you if you have an affirmative defense to the collection action.
My question to you is WHY ALLOW A FORECLOSURE? If you take charge of the situation and work with an experienced (let me say that again, experienced) short sale listing agent, you can then negotiate the outcome on all the junior liens. Even if they don't agree to accept payment received as payment in full, you will NOT be worse off then you are right now, AND, you then set the timeline for move out, etc. Call, if you would like to discuss your options further. There is no obligation if you choose to allow the foreclosure. However, my philosophy is Foreclosure is NOT a Choice, it is something that happens to you when you are willing to abdicate control. Find out about ALL your options and Dare to Dream.
Shel-lee Davis, CDPE, SFR, QSC
Your Real Estate Consultant for Life
RE/MAX Palos Verdes Realty