Status of 580b amendment for California anti-deficiency protection? (non cashout refi of purchase money)

[Marvin536]

Hi. I've skimmed through so many posts with people worried about their 2nd going after them... I came across this person's post..

Does a California Refi Result in Loss of 580b Protection?

Does anybody know if this has been passed? Seems like a majority vote of 20 to 0 on the standard committee and it was awaiting the vote from the executive committee..

they all believe that it is common sense for the homeowner to refi purchase money if it made financial sense to do so and they're trying to amend the law where you are protected up to the amount of the original purchase price..

therefore the 2nd mortgage can only go after the difference between the new loan(s) and the original purchase loan(s)..

i did a non-cashout refi (but balance went up a little bit when they paid off a tax installment due in advance).. we got a terrible loan from the homebuilder (their incentives was 5k towards closing).. 80/20 - 5 year Interest only at 7% on a 1st and 11% on a 2nd..

we never intended to walk so we refied to a more stable loan at 30 year fixed 5.875% (principal AND interest) 1st and fixed 2nd at 7%.. what a major difference!

but now we are screwed when we decide because we lost our anti-deficiency protection by refinance our purchase money loans...

[Dizzle831]

Hey Marvin,

I'm in a similar situation with refi'ing to escape our first jumbo loan (80/20) to an ARM to my second refi w/ a fixed 40 yr interest only option for the first 10 yrs. I have read in several places where Prof. Shays has stated that although folks like us who have refi'ed makes our loans recourse, banks in CA "undoubtedly" will pursue a non-judicial foreclosure forfeiting their one opportunity to seek a deficiency judgment. And by doing so will relinquish any resonsibility of the borrower of paying the lender back. With that said we should be safe. The one thing i am concerned about is CA tax for 2010, but it looks like they will be ammendeding the CA Tax Relief Act. Fingers Crossed!

Good Luck Marvin. Hope this helps!

Dizzle

Hi. I've skimmed through so many posts with people worried about their 2nd going after them... I came across this person's post..

Does a California Refi Result in Loss of 580b Protection?

Does anybody know if this has been passed? Seems like a majority vote of 20 to 0 on the standard committee and it was awaiting the vote from the executive committee..

they all believe that it is common sense for the homeowner to refi purchase money if it made financial sense to do so and they're trying to amend the law where you are protected up to the amount of the original purchase price..

therefore the 2nd mortgage can only go after the difference between the new loan(s) and the original purchase loan(s)..

i did a non-cashout refi (but balance went up a little bit when they paid off a tax installment due in advance).. we got a terrible loan from the homebuilder (their incentives was 5k towards closing).. 80/20 - 5 year Interest only at 7% on a 1st and 11% on a 2nd..

we never intended to walk so we refied to a more stable loan at 30 year fixed 5.875% (principal AND interest) 1st and fixed 2nd at 7%.. what a major difference!

but now we are screwed when we decide because we lost our anti-deficiency protection by refinance our purchase money loans...

[HopingtoFind]

Dizzle... Do you still have 1st and 2nd after your refi... the problem here is if your property is underwater... yes the 1st will most likely choose a non-judicial foreclosure. The problem is with the 2nd, becase since they are unsecured they generally charge off and pursue you through collections.

[dealingwithHomeEq]

Marvin536:


The e-mail contact addresses for the Executive and Standing Committees are listed on the first page of the referenced document. It might be worth a shot in the dark to e-mail them and ask them if they know of the status of the proposal or if they can direct you to someone who does. If you find out, please post for the rest of us. Thanks.

[Dizzle831]

Hoping,

After reading the original post again you are correct. I assumed Marvin rolled his 80/20 into a conventional. When i refi'ed the first time i rolled it into a conventional 30yr, 5yr ARM with a pick and choose payment. It was good for the first couple months but payments slowly climbed almost $300 a month before refi'ing again into my current loan (40yr fix rate 10yr I/O option). Hopefully CA will amend the anti-deficiency along with the Tax Relief Act!

Dizzle... Do you still have 1st and 2nd after your refi... the problem here is if your property is underwater... yes the 1st will most likely choose a non-judicial foreclosure. The problem is with the 2nd, becase since they are unsecured they generally charge off and pursue you through collections.

[Marvin536]

Hi dizzle. Still refied to another 80/20 but dropped the 1st loan amount to max confirming limit of 417k and increased the 2nd. This was the best way to get a low fannie mae rate on the 1st. I also heard its sometimes the mortgage insurance companies that try to go after the deficiency. I'm sure with the amount of us in the same situation, I'm hoping that antideficiency amendment has been passed.

[KT in CA]

According to Professor Shays, the mortgage insurance companies cannot come after you for the deficiency either if your lender goes the non-judicial foreclosure route. He says they have no great rights than the lender in that case. As far as unsecured seconds, that is a different story.

[Marvin536]

I have emailed the two emails on that amendment and I have not heard a single word from any of them.. DOES ANYBODY KNOW IF THIS AMENDMENT HAS BEEN PASSED??

I need some piece of mind.. I'm sure we could all get together and form a class action lawsuit to pusht his forward.. it doesn't seem fair to lose our anti-deficiency protection just because we refinanced our original purchase money (which was a predatory loan to begin with!).. i understand we should be protected up to the amount of the purchase price (it makes sense not to protect money cashed out of equity that were not used for the purchase of hte home)..