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Is a second mortgage in California non-recourse?
Anonymous2 views3 answers
I took out my the first mortgage in 2003 with Chase and then took out a second mortgage (not paying off the first) in 2005 with B of A. In 2011, Chase foreclosed, but the proceeds from the sale did not pay off the second. The second has sent me letters threatening to come after me for a deficiency judgment in the amount of the loan, $124k. I have heard that in California a second mortgage is non-recourse? Is this true, can B of A come after me for the deficiency?
Second mortgage is not recourse if it is a purchase money loan. Purchase money loan is a loan taken to buy the property. Here you describe buying the property and later borrowing against it. Yes, they can sue to collect a deficiency. You can either 1) ignore and hope they miss the statute of limitation to sue you 2) attempt to settle for less than what is owed 3) bankruptcy to discharge the debt.
Non-recourse means that can only foreclose and not sue you. The loan you describe sounds like a recourse loan and they CAN sue you for the unpaid balance. I recommend contacting a local bankruptcy attorney for further help.
Based on the facts you have presented, you are liable for the second mortgage. Because this was a refinance loan, it does not fit within one of the safe harbors under the anti-deficiency statutes.
