Would the "security first rule" prevent a bank from suing us?

By security first rule, I assume you are talking about California's antideficiency law. It is more complicated than this, but basically it means that most first mortgage purchase money loans are nonrecourse, meaning the lender is limited to foreclosing and selling the home has has no recourse to sue for the deficiency, which is the difference between the remaining loan balance and the amount the house sells for at auction. However the law does not necessarily apply to second mortgages, which are often recourse loans. To be sure, you should have a lawyer read the deed of trust for your mother's second loan. I don't know what you mean by a credit card. If you had some sort of home equity line of credit secured by the property that came with a credit card, then it most likely is a recourse loan.

That depends on the location of the property. If in Nevada, the second lien holder could sue your mother on the debt and waive (or give up) its interest in the collateral. Second lien holders frequently do just that in Nevada because their liens are worthless due to the market crash in real estate. In Nevada, the security first rule? is called the One Action Rule? and provides that if a lender does not foreclose on the collateral first it will lose the collateral (the home) as security. But, the debt survives and the lender can sue the borrower on the promissory note. There are a few things to try. If the first lien holder would foreclose, the second lien holder would have only 6 months from the foreclosure sale to file a lawsuit against your mother. If it failed to do so within 6 months, the debt would in effect be discharged. Another avenue to pursue would be to ask how much the second lender paid for the promissory note. If it purchased the debt from another lender at a discount, then it can recover from your mother only the amount it actually paid for the debt. For example, if the current lender bought the debt from the original lender for 60% of the face value, then the current lender could get only that 60% from your mother even if she owes 100%. Other states have different laws, so you need to talk to a lawyer in the state in which the property is located.