Last year California signed into law protection for homeowners who lost their homes through foreclosure. Is essence, the law prohibited lenders from suing displaced homeowners for the loss suffered in market value if the loan was purchase money. This law closely resembled the federal law still in effect.
In fairness to all homeowners in this time of economic crisis, Realtors® believe that this protection should extent to loans that were refinanced (often at the lenders urgings). Often this money is used to improve the value of the home, or to make the home more in tune with living requirements. This protection does NOT cover money pocketed by the homeowner!
There is currently a bill before the legislation to do just this; SB 1178. Lenders are pushing hard to keep it from being signed. The California Association of Realtors®, the National Association of Realtors® and your local Association of Realtors® are fighting to have this protection not only extended but made permanent.
I would like to ask your help also. Contact the capitol to urge the signing of this bill. The main talking points are:
- SB 1178 is fair. SB 1178 preserves the legitimate understanding between the homeowner and the lender when the property was originally purchased.
- SB 1178 only applies to the amount originally financed, not any “cash out” that an owner may have borrowed above and beyond the initial loan.
- SB 1178 is does not re-write existing contracts. The bill does apply to new suits brought on existing loans, even if the loans were made prior to the passage of the bill.
For more information contact us or your Realtor®. You can find much more information on line also; just Google (or Yahoo or Bing) SB 1178. Remember, your Realtors® are fighting for you, and we can always use your help!
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