The worst case scenario when homeowner is waiting and doing nothing and finally end up in foreclosure. In most of the states he is responsible for 2nd lien. Lender can sue the homeowner for any fee or deficiency, send 1099 to IRS showing your capital gain on the property and any other foreclosure consequences you can read on this web site.
In your state Suzanne you don't have to worry about it because if your home was foreclosed, CA state prohibits to collect any money by lender. It means deficiency judgment is not allowed.
It's hard to believe sometimes that 2nd lender gives hard time to negotiate with them. Most of the time 1st lender is willing to work with you but not 2nd. Hope this helps.
