Hi - my name is XXXXX XXXXX X'm a Real Estate litigation attorney here to assist you.

The real issue is that IF the money you borrowed under both loans was used to pay the purchase price of the house (called "purchase money mortgage"), the lender does not have a right to seek to recover the debt from you because California does not allow deficiency judgments against a debtor for a purchase money mortgage.

Cal. Code of Civil Proc. 580(b) says:

No deficiency judgment shall lie in any event after a sale of real property or an estate for years therein for failure of the purchaser to complete his or her contract of sale, or under a deed of trust or mortgage given to the vendor to secure payment of the
balance of the purchase price of that real property or estate for years therein, or under a deed of trust or mortgage on a dwelling for not more than four families given to a lender to secure repayment of a loan which was in fact used to pay all or part of the purchase price of that dwelling occupied, entirely or in part, by the
purchaser.

Where both a chattel mortgage and a deed of trust or mortgage have been given to secure payment of the balance of the combined purchase price of both real and personal property, no deficiency judgment shall lie at any time under any one thereof if no deficiency judgment would lie under the deed of trust or mortgage on the real property or estate for years therein.

http://law.onecle.com/california/civil-procedure/580b.html