Banks and credit unions routinely walk away from second trust deeds where there isn't enough equity to cover the outstanding loan balance plus interest, arrears, costs of sale and attorneys' fees. This is especially true where the borrower files a chapter 13 bankruptcy case, which allows certain secured liens to be completely avoided.
But there is no reason for banks or credit unions to unknowingly and prematurely walk away from second trust deeds that are given special protections in bankruptcy.
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