[CatoRenasci]

The situation in California is (probably still) very different. When I was in law school, California had (still has?? anyone know?) an anti-deficiency statute and single action statute, both legacies of the depression, which prohibit a lender from collecting a "deficiency" judgement for the difference between the mortgage debt and the sale price of a property. In essence, if one gets in too far underwater on a mortgage (well, trust deed, actually, but that's technical) in California, you could just give the bank the keys and walk away with no debt.

[doug from upland]

You are correct about the anti-deficiency statute in Calfornia on a purchase money deed of trust for a single family dwelling. I haven't taught RE law for 10 years, so please verify for me --- a refinance probably changes a non-recourse note and trust deed into a recourse instrument, which means personal liability. A short sale also will affect credit.