(a) There can be but one form of action for the recovery of
any debt or the enforcement of any right secured by mortgage upon
real property or an estate for years therein, which action shall be
in accordance with the provisions of this chapter.  In the action the
court may, by its judgment, direct the sale of the encumbered real
property or estate for years therein (or so much of the real property
or estate for years as may be necessary), and the application of the
proceeds of the sale to the payment of the costs of court, the
expenses of levy and sale, and the amount due plaintiff, including,
where the mortgage provides for the  payment of attorney's fees, the
sum for attorney's fees as the court shall find reasonable, not
exceeding the amount named in the mortgage.
(b) The decree for the foreclosure of a mortgage or deed of trust
secured by real property or estate for years therein shall declare
the amount of the indebtedness or right so secured and, unless
judgment for any deficiency there may be between the sale price and
the amount due with costs is waived by the judgment creditor or a
deficiency judgment is prohibited by Section 580b, shall determine
the personal liability of any defendant for the payment of the debt
secured by the mortgage or deed of trust and shall name the
defendants against whom a deficiency judgment may be ordered
following the proceedings prescribed in this section.  In the event
of waiver, or if the prohibition of Section 580b is applicable, the
decree shall so declare and there shall be no judgment for a
deficiency.  In the event that a deficiency is not waived or
prohibited and it is decreed that any defendant is personally liable
for the debt, then upon application of the plaintiff filed at any
time within three months of the date of the foreclosure sale and
after a hearing thereon at which the court shall take evidence and at
which hearing either party may present evidence as to the fair value
of the real property or estate for years therein sold as of the date
of sale, the court shall render a money judgment against the
defendant or defendants for the amount by which the amount of the
indebtedness with interest and costs of levy and sale and of action
exceeds the fair value of the real property or estate for years
therein sold as of the date of sale.  In no event shall the amount of
the judgment, exclusive of interest from the date of sale and of
costs exceed the difference between the amount for which the real
property or estate for years therein was sold and the entire amount
of the indebtedness secured by the mortgage or deed of trust.  Notice
of the hearing shall be served upon all defendants who have appeared
in the action and against whom a deficiency judgment is sought, or
upon their attorneys of record, at least 15 days before the date set
for the hearing.  Upon application of any party made at least 10 days
before the date set for the hearing the court shall, and upon its
own motion the court at any time may, appoint one of the probate
referees provided for by law to appraise the real property or estate
for years therein sold as of the time of sale.  The probate referee
shall file the appraisal with the clerk and the appraisal is
admissible in evidence.  The probate referee shall take and subscribe
an oath to be attached to the appraisal that the referee has truly,
honestly and impartially appraised the real property or estate for
years therein to the best of the  referee's knowledge and ability.
Any probate referee so appointed may be called and examined as a
witness by any party or by the court itself.  The court shall fix the
compensation, in an amount as determined by the court to be
reasonable, but the fees shall not exceed similar fees for similar
services in the community where the services are rendered, which may
be taxed and allowed in like manner as other costs.
(c) No person holding a conveyance from or under the mortgagor of
real property or estate for years therein, or having a lien thereon,
which conveyance or lien does not appear of record in the proper
office at the time of the commencement of the action need be made a
party to the action, and the judgment therein rendered, and the
proceedings therein had, are as conclusive against the person holding
the unrecorded conveyance or lien as if the person had been a party
to the action.  Notwithstanding Section 701.630, the sale of the
encumbered real property or estate for years therein does not affect
the interest of a person who holds a conveyance from or under the
mortgagor of the real property or estate for years therein mortgaged,
or has a lien thereon, if the conveyance or lien appears of record
in the proper office at the time of the commencement of the action
and the person holding the recorded conveyance or lien is not made a
party to the action.
(d) If the real property or estate for years therein mortgaged
consists of a single parcel, or two or more parcels, situated in two
or more counties, the court may, in its judgment, direct the whole
thereof to be sold in one of the counties, and upon these
proceedings, and with like effect, as if the whole of the property
were situated in that county.
(e) If a deficiency judgment is waived or prohibited, the real
property or estate for years therein shall be sold as provided in
Section 716.020.  If a deficiency judgment is not waived or
prohibited, the real property or estate for years therein shall be
sold subject to the right of redemption as provided in Sections
729.010 to 729.090, inclusive.
(f) Notwithstanding this section or any other provision of law to
the contrary, any person authorized by this state to make or arrange
loans secured by real property or any successor in interest thereto,
that originates, acquires, or purchases, in whole or in part, any
loan secured directly or collaterally, in whole  or in part, by a
mortgage or deed of trust on real property or an estate for years
therein, may bring an action for recovery of damages, including
exemplary damages not to exceed 50 percent of the actual damages,
against a borrower where the action is based on fraud under Section
1572 of the Civil Code and the fraudulent conduct by the borrower
induced the original lender to make that loan.
(g) Subdivision (f) does not apply to loans secured by
single-family, owner-occupied residential real property, when the
property is actually occupied by the borrower as represented to the
lender in order to obtain the loan and the loan is for an amount of
one hundred fifty thousand dollars ($150,000) or less, as adjusted
annually, commencing on January 1, 1987, to the Consumer Price Index
as published by the United States Department of Labor.
(h) Any action maintained pursuant to subdivision (f) for damages
shall not constitute a money judgment for deficiency, or a deficiency
judgment within the meaning of Section 580a, 580b, or 580d of the
Code of Civil Procedure.
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Notes:  
1. This seems to be where the 90 days to collect on the the deficiency urban myth seems to have started
2. When the one action rule and the security first rule are combined against sold out junior you can frequnetly get the seconds to accept a short payoff for 
just pennies on the dollar.  (true principle reduction).
3. Some truly experienced short sale negotiatiors are agruing that this rule should or is applied to short sales.  
The argument is not illogical and some cases have punished banks when they helped themselves to their own remedy.
But, I would defer to case law or make sure I had a solid release from deficiency in writing
before I risked my assets or future salary on such a hope. (presuming other good options are available.)  
But, if you find yourself being the victim of a poor short sale negotiation, you may wish to speak with an attorney about this argument.