Here’s a place where we can help each other: California’s legislature has recently passed SB 1178 (Corbett) to extend anti-deficiency protection to homeowners who have refinanced.   

California’s anti-deficiency protection says that if a homeowner defaults on a mortgage used to purchase his or her home, the homeowner’s liability on the mortgage is limited to the property itself … but the law doesn’t apply to loans used to refinance the original purchase loan.

Recently low interest rates have induced hundreds of thousands of refinanced mortgages … yet by refinancing to obtain a lower rate, homeowners forfeited the protections and became personally liable on the new note …. SB 1178 will correct this by extending anti-deficiency protections to those who have refinanced their loans. 

Please take action and contact Governor Schwarzenegger to urge him to sign SB 1178 as it will extend existing anti-deficiency protections to those homeowners who have refinanced their home mortgage (many of us). When most of us were refinancing our homes, usually to get a better interest rate, few of us were told that if we lost our home to foreclosure, the lender can not only take the home, but can also pursue us.

I would be willing to bet that very few owners were aware that they lost their anti-deficiency protection when they refinanced.

Posted by:  Tom Verkozen