ProfessorShays

  

If your sale is not consummated under the facts as given, and if the holder of the first completes their foreclosure, that will place the Chase loan in the position of being an unsecured debt (due to the loss of its security interest in the home). Since it appears that the Chase loan was a true HELOC, and not a "purchase money" loan, I seriously doubt under California Civil Code Section 580b, it would be non-recourse effectively meaning you would be on the hook for the entire amount.

That of course suggests that Chase plays a hard-ball approach, which they might just do. Know that if there is an "overbid" at the foreclosure sale on the first, disbursement of any overbid would go to Chase, thus reducing their debt. Given what you characterize as a relatively low balance on the first, an overbid may well be possible. So Chase receives a partial pay down via the overbid, and chases you for the rest.

I agree with Poppy and find an expert real estate attorney that specializes in these situations. In a past life I did that. Fortunately this time around, well I'm sitting this dance out, enjoying the leisure associated with being tenured faculty.

Daniel