If your California home is underwater, and you lose it in foreclosure or go through a short sale, you'll have a deficiency. The deficiency is the difference between the sales price and what you owed on the mortgages. In some states, you'll be on the hook for the deficiency after foreclosure or short sale. If you live in California however, the law offers more protection. In most residential foreclosures and short sales, the lender cannot sue you for the deficiency. But there are a few exceptions, so read the articles below to find out what will happen with your California home.