To understand new framework where this matter appears, in addition to competing court and you can societal plan arguments, i very first briefly opinion certain history values off mortgage loans and you will action out of trusts, the fresh new antideficiency statutes, the full borrowing bid rule, and fraud states.

It appliance “entitles the lender to arrive specific resource of the debtor if the the notice isnt reduced

The protection means protects brand new promissory mention. Within the Ca, the security means is actually most commonly a deed away from believe (to your borrower and you can creditor known as trustor and you can beneficiary and you can a basic 3rd party known as trustee). The security means can be home financing (with mortgagor and you may mortgagee, as the participants). Regardless, the collector is considered to have good lien toward property provided since safety, which is also named security.” (Bernhardt, Cal. Home loan and you will Deed out-of Faith Habit (Cont.Ed.Club 2d ed. step one990) 1.step 3, p. 5, italics removed.) fn. 2

A protection focus never exist instead of a main obligations, and therefore a home loan or deed off trust are extinguished by both payment otherwise sales of the home in an amount which meets the latest lien. (Civ. Code, 2909, 2910; fn. step 3 find Cornelison v. Kornbluth (1975) 15 Cal. three dimensional 590, 606 [125 Cal. Rptr. 557, 542 P.2d 981]; Bernhardt, Cal. Financial and you may Deed off Believe Behavior, supra, step 1.ten, p. 15; id., 6.sixteen, p. 292.) Concurrently, merger of lien and you may ownership of the property in one single people otherwise entity extinguishes brand new lien, except if it is important for the cover of consumer’s rights the lien become sustained. (Ralph C. Sutro Co. v. Vital Plastering, Inc. (1963) 216 Cal. Software. 2d 433, 438 [31 Cal. Rptr. 174]; pick First American Label In. Co. v. You.S. (9th Cir. 1988) 848 F.2d 969, 971, applying Ca rules [“In theory the newest mortgagee’s less appeal (the newest lien) has ‘merged’ to your deeper attract (the fee).”].) [10 Cal. fourth 1236]

The challenge here is the aftereffect of an excellent lender’s complete borrowing from the bank bid at an effective nonjudicial property foreclosure sale on the its allege from swindle from the inducement of your own underlying mortgage responsibility

California has actually a complex and you will interrelated group of foreclosure and you may antideficiency rules relating to the enforcement of debt safeguarded from the interests into the houses. Many of these guidelines was in fact introduced as the result of “the favorable Despair and also the corresponding legislative abhorrence of one’s the also prominent foreclosures and forfeitures [which took place] throughout that time to possess factors beyond the control over the brand new debtors.” (Hetland & Hansen, The newest “Mixed Equity” Amendments in order to California’s Industrial Code-Stealth Repeal from California’s Real-estate Property foreclosure and Antideficiency Conditions or Exercise from inside the Futility? (1987) 75 Cal. L.Rev. 185, 187-188, fn. omitted.)

Pursuant to this legal system, there was just “you to definitely form of action” into data recovery of every obligations and/or enforcement of every right secure by a mortgage otherwise Auburn quick loans deed off trust. You to action is actually property foreclosure, which can be sometimes judicial otherwise nonjudicial. (Code Civ. Proc., 725a, 726, subd. (a).) In an official foreclosures, in case the home is ended up selling at under the level of the a great indebtedness, the new creditor may look for an insufficiency judgment, or the difference between the amount of new indebtedness therefore the reasonable market price of the home, because dependent on a court, in the course of the fresh new sale. (Roseleaf Corp. v. Chierighino (1963) 59 Cal. 2d thirty-five, 43-49 [twenty-seven Cal. Rptr. 873, 378 P.2d 97].) But not, the newest debtor keeps a legal proper away from redemption, otherwise an opportunity to win back control of the house by paying the newest foreclosure income price, getting a time immediately following foreclosure. (Bernhardt, Cal. Mortgage and Action away from Faith Behavior, supra, 3.54, p. 143; id., step 3.76, p. 173; id., step three.77, p. 174.)