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Does a lender of a 2nd purchase money loan (Not a line of credit) in the State of California who agrees to accept a short payoff to release the lien still have the right to go after the Seller for the balance? I thought if it was owner occupied, 1-4 family residence and purchase money the lender could not seek a deficiancy judgement. Please clarify. Thanks. Jen

jenkin7 · Posted: Thu Jul 02, 2009 11:49 pm Post subject:

Hi Jen,

The second mortgage holder can seek deficiency judgment against a borrower. But as far as I know, California has some strong anti-deficiency laws that protect the borrower from any such deficiency judgments. You can check with a lawyer whether the anti-deficiency laws apply in your situation. However, if the lender agrees to accept a short payoff during the negotiations, they should not come after for the deficiency. Thus, it is better to get it in writing from the lender if they say they will happy with a short payoff.

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SHORT SALE 2ND LOANS