California NAR Wants Action on Deficiency Judgment Bill- California’s Realtors have called on Gov. Arnold Schwarzenegger to sign legislation that extends — in a narrowed manner — the state’s protections against deficiency judgments to homeowners who have refinanced their properties.
Under existing law, the liability of a borrower who defaults on a purchase money mortgage is limited to the value of the property itself at the time it is sold by the lender. However, owners who have refinanced the original debt, even it was simply to obtain better terms, are not extended the same protections.
Late last week, the California State Assembly passed on a 49-14 vote a bill that would extend the anti-deficiency protection to cover refinancing’s, up to a maximum that cannot exceed the original loan amount. Cash-out debt used for home improvements or consumer expenses is not protected by the measure, nor is additional debt secured by the property, used for such purchase as a home improvement.
In calling on the Governor to quickly sign the bill, Steve Goddard, president of the California Association of Realtors, called the measure a “victory” for homeowners in the Golden State. If signed, the law would take effect in June 2011.