Senate Bill 1178

Interest rates have been consistently lowering over the past several years. If you watch television, you’ve seen lender marketing campaigns touting low interest rates and encouraging homeowners to discuss refinancing options with them.

If those homeowners, who have refinanced, default on a mortgage greater than the value of the property, it’s called a Deficiency Liability and under California Law, the lender can sue the homeowner for the amount of the deficiency even after taking back the property. UGH!

I wonder how many homeowners knew about this when they had finished signing the refinance paperwork?!

On the original purchase money mortgage, homeowner mortgage liability was limited to the property itself.
Unfortunately, the original purchase money protection was not extended to loans that refinance the original purchase money debt.

To address this issue, Senator Ellen Corbett: Democrat- San Leandro, sponsored SB 1178.

“This bill would provide that a loan used to pay all or part of the purchase price of real property or an estate for years includes subsequent loans, mortgages, or deeds of trust that refinance or modify the original loan, but only to the extent that the subsequent loan was used to pay debt incurred to acquire, construct, or substantially improve the real property. If approved, this will take effect June 1, 2011.”1.

For more information on SB 1178, Google SB 1178 or log onto the C.A.R. website.

For information on Mammoth Lakes real estate please log onto my real estate website at www.easternsierraproperties.com

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1. http://www.legisweb.com