(a) For purposes of this section:
(1) “Beneficiary” means a “beneficiary” as defined in paragraph (3) of subdivision (a) of Section 5102 of the Commercial Code.
(2) “Issuer” means an “issuer” as defined in paragraph (9) of subdivision (a) of Section 5102 of the Commercial Code.
(3) “Letter of credit” means a “letter of credit” as defined in paragraph (10) of subdivision (a) of Section 5102 of the Commercial Code whether or not the engagement is governed by Division 5 (commencing with Section 5101) of the Commercial Code.
(b) With respect to an obligation which is secured by a mortgage or a deed of trust upon real property or an estate for years therein and which is also supported by a letter of credit, neither the presentment, receipt of payment, or enforcement of a draft or demand for payment under the letter of credit by the beneficiary of the letter of credit nor the honor or payment of, or the demand for reimbursement, receipt of reimbursement or enforcement of any contractual, statutory or other reimbursement obligation relating to, the letter of credit by the issuer of the letter of credit shall, whether done before or after the judicial or nonjudicial foreclosure of the mortgage or deed of trust or conveyance in lieu thereof, constitute any of the following:
(1) An action within the meaning of subdivision (a) of Section 726, or a failure to comply with any other statutory or judicial requirement to proceed first against security.
(2) A money judgment for a deficiency or a deficiency judgment within the meaning of Section 580a, 580b, or 580d, or subdivision (b) of Section 726, or the functional equivalent of any such judgment.
(3) A violation of Section 580a, 580b, 580d, or 726.
(Amended by Stats. 1996, Ch. 176, Sec. 2. Effective January 1, 1997.)