My first answer is - it depends. My second answer is - this is a question that needs an attorney - since it is a legal question. I will share what I have been told, but I am just passing along information, not giving any legal advice. If you need a referral to a great attorney in the South Bay, let me know.
So here is what I have been told. When it comes to enforcing obligations secured by California real estate, California is a â€œsingle actionâ€ or â€œone-actionâ€ state. Civil Procedure Code Section 726(a) provides in part that â€œ[t]here can be but one form of action for the recovery of any debt or the enforcement of any right secured by a mortgage upon real property.â€
So, if you had one loan for the full $370,000 and the lender did a standard foreclosure under the terms of the Deed of Trust (ie a Trustee Sale/Action, not a judicial foreclosure), then they have exhausted their single action. They cannot come after you for a deficiency judgment. On the other hand, if you had two loans and it was the 1st TD lender that foreclosed, the holder of the 2nd can come after you. The foreclosure may have wiped out their security interest in your property, but it did not satisfy the note (your promise to pay).
This is why (1) it depends and (2) get legal advice specific to your situation. Again, you can contact me if you would like the names of some good attorneys who practice real estate law in LA County. Dare to Dream.
Shel-lee Davis, CDPE, SFR, QSC
Your Real Estate Consultant for Life
RE/MAX Palos Verdes Realty