Hello,

In a Cal Vet loan the state of California is the actual lender, not the VA. So it would not fall under the exemption for VA loans for deficiency judgments. So if this was a purchase money loan not guaranteed by the VA, they couldn't come after you for a deficiency if they foreclosed.
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With that said, if they are willing to do a deed in lieu of foreclosure, that would be the best option because the debtor signs the property back over to the lender and then the lender forgives the outstanding debt. This is less damaging to your credit than a foreclosure.
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Thanks.

Barrister

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