California Foreclosure Laws
California is a no deficiency judgment state, although it is still possible to get a deficiency judgment in California. The lender has to foreclosure through a lawsuit – which usually neer happens.
California lenders are subject to 2 regulations tht work in favor of the borrower:
- When pursuing any secured obligation like a home loan, they must collect from collateral first.
- California has the One Action Rule, which one collecting a debt, you can only get one shot.
How does this help the borrower? Most loans in California are secured with a Trust Deed which allows the lender to foreclosue on a house non-judicially, without going to court. This route is much cheaper than foreclosure judicially, through the courts since the courts are slow and quite expensive.
In order for the lender to get a deficiency judgement, they have to go to court.