You don't say whether your first loan is current or in default or foreclosure. If you are not in default on the first loan, then there is no reason to stir things up with the second. If the first forecloses after four years from your breach on the second loan, then the 'sold out' second has no recourse left at all - they can't sue on the note. If the second files a notice of default and threatens to foreclosye before the four years lapses, and you are current on the first and want to keep the home, then you should indeed consult with a bankruptcy attorney about a Ch.13.
Richard A. Rodgers, Esq.
200 N. Westlake Blvd. Ste 201
Westlake Village, CA 91362
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The normal statute of limitations for a breach of written contract is 4 years, from the breach. But that is not the real question to ask: The question is why hasn't the second mortgage started a foreclosure proceeding? Because in California, 99.9% of all residential mortgages that are secured by real estate have to go after the "security first." That is, foreclose on the property.
I will assume that in your case, the 2nd hasn't done this because there is no equity in the property. Thus, the 2nd is waiting for the 1st to foreclose. Then, the second can sue as a "sold out junior."
I would recommend that you schedule a consultation with two different attorneys: The first being a real estate attorney who understands mortgages, deeds of trust and anti-deficiency rules. The second being a bankruptcy attorney, who may be able to "strip" the second from the property, thus making it an unsecured loan, which you may be able to avoid paying (in full or in part -- depending on whether you otherwise qualify for BK; and if so, which Chapter you file).
It is worth the cost of these consultations to educate yourself.
Both Attorneys Rodgers and Hoffman provide correct responses. There's no incentive for the 2nd to hound you right now, and no need for you to stir things up with the 2nd.
Frank W. Chen has been licensed to practice law in California since 1988. The information presented here is general in nature and is not intended, nor should be construed, as legal advice. This posting does not create any attorney-client relationship with the author. For specific advice about your particular situation, consult your own attorney.