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> Wait, what? There are states where I can buy a million dollar house with a loan, and if I default they can only take the house, not the value of the loan?

Yes, and California is one of those states, for purchase-money mortgages on owner occupied properties; and after Jan 1, 2013, also for refinances of purchase-money mortgages on owner occupied properties. Foreclosing the property satisfies the loan, if there's excess from the foreclosure auction, you'll get paid; if there's a deficiency, you'll have taxable income for the amount written off. Word on the street is most California foreclosures go through the non-recourse process (private sale), even for loans that they could sue for deficiency (judicial foreclosure), because the process is quicker and simpler.