Foreclosed? You may still owe your second mortgage.


If you lost your home to foreclosure in California, you may still owe your second (and other) mortgages.

California is a "non-recourse" state, meaning that mortgages taken for the purpose of buying a home do not remain personal debts of the borrower after a foreclosure that doesn't fully pay those mortgages. But other loans that placed mortgages on that property, obtained for reasons other than the original purchase, do remain the personal debt of the borrower. The lender(s) may sue to collect the amounts remaining on those additional home loans, including money taken from home equity lines of credit (HELOC). This can be a very unpleasant surprise to people who have just lost their homes to foreclosure.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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