Thank you for your question.
To the extent that the bank took the property, whether it is sold for a value that satisfies the first mortgage is irrelevant, as a deficiency judgment cannot be taken against you for that amount. To the extent that the property sells for an amount that does not satisfy the second mortgage, you can be held responsible. Under California law, you cannot be held responsible for a deficiency judgment on a purchase money loan. These are funds that were used to purchase the property. Since the HELOC was taken out after purchase (albeit a few weeks after purchase), this is not considered purchase monies and the lender would likely have recourse against you.
You best case scenario may be to have the loan agreement for the HELOC reviewed by a local attorney to determine whether you can be held responsible for this loan. To the extent that you can be, you may consider offering the lender a settlement offer so you do not end up paying the entire amount.
I am sorry.
Please let me know if you have any other questions on this matter or require clarification. Otherwise please hit "ACCEPT" so I may receive credit for my efforts.
If you have additional questions, please keep in mind that I do not know what you already know or don't know, or with what you need help, unless you tell me. Please consider that I am answering the question or question that is posed in your posting based upon my reading of your post and sometimes misunderstandings can occur. If I did not answer the question you thought you were asking, please respond with the specific question you wanted answered.
Also remember, sometimes the law does not support what we want it to support, but that is not the fault of the person answering the question, so please be courteous.
There can also be a delay of an hour or more in between my answers because I may be helping other customers or taking a break.
Use of this service does not create any attorney client relationship. Any information provided is not the practice of law but intended to direct you in finding an attorney in your locale.
You can always request me with beginning your question with "For LawGirl..."