I assumed the lender that was holding the first loan foreclosed. If the second loan was money you used to buy the house (in addition to the first), and it was owner-occupied then you are not liable under California law. Otherwise, the second loan's lender has the right to pursue you for the deficiency. However, lenders haven't been doing that in great numbers yet (for second loans), probably because they see that a lot of people don't have much of anything left right now to go after in this economic crisis.
