California Code, Health and Safety Code - HSC § 51658

(a) The agency shall establish procedures to be followed by approved lending institutions in the event of default on a loan insured under this part. The agency may require that, prior to submitting a claim, an approved lending institution shall foreclose or exercise a power of sale and take possession of the property or otherwise acquire title and possession of the property within the time specified by the agency. The agency may, upon submission of the claim, pursue one of the following alternatives:

(b) In any case in which the agency has insured only a portion of the outstanding principal indebtedness of a loan, it may further provide that not more than an equivalent percentage of the total accrued interest and costs shall be payable by the agency pursuant to this section in the event of a default.