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  1. #1

    Default Liability for Second Mortgage After a Foreclosure in California

    My question involves a mortgage in the state of: CA

    A property foreclosed on in 2011 by the 1st mortgage holder.
    The 2nd mortgage received no money from the subsequent court house steps sale of the property.
    The 2nd mortgage is attempting to collect.
    The 2nd mortgage was a rate and term refi of a rate and term refi of a purchase money mortgage.

    a) Is there liability for any of the 2nd mortgage outstanding balance?
    b) If the 2nd mortgage had been a partial cash out (on the first rate and term refi), does that change the recourse for the 2nd?
    c) If the property was primary residency when purchased and all loans executed, but had been a rental for two years prior to the foreclosure, does that make a difference?

    Thanks!

  2. #2
    Join Date
    Sep 2005
    Location
    California
    Posts
    64,960

    Default Re: Liability for Second Mortgage After a Foreclosure in California

    If it was both a refi and a situation in which you used the second mortgage to take cash out of the property, I don't see a viable argument that it was a purchase money mortgage such that it would be non-recourse.

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