Home > Real Estate > Gov. Schwarzenegger vetoes consumer-protection anti-deficiency bill

Gov. Schwarzenegger vetoes consumer-protection anti-deficiency bill

California Gov. Arnold Schwarzenegger on Friday vetoed a bill that would have protected distressed homeowners from the threat of a deficiency judgment after a foreclosure, according to a news release from the California Association of Realtors.

SB 1178, which was sponsored by CAR, expanded anti-deficiency protections to those who refinanced their original mortgages but did not take cash out.

The Governor, in his veto message, said the bill would interfere with an existing contract between the homeowner and the lender. But few homeowners who refinanced their original mortgages really understood that they were giving up the anti-deficiency rights present for purchase-money loans on principal residences. And this bill would not have applied to “cash-out” debt for home improvement or consumer expenses or new debt secured on the home, such as a home improvement loan.

That was a misguided veto by the governor.

California’s anti-deficiency protection for “purchase money” mortgages says that if a homeowner defaults on a mortgage used to purchase a home, the bank can’t later pursue them for the difference between what they received and what was owed.

That law was enacted in the 1930s to protect borrowers, ensure the quality of loan underwriting and allow borrowers brought down by financial crisis to get back on their feet. But times have changed. The average lifespan of a mortgage in California during the first decade of this century was less than four years, as homeowners took advantage of historically low interest rates. SB 1178 would have updated the current law to ensure homeowners who refi’d simply to get a better rate didn’t lose their lawful protections.

To voice your displeasure with the governor’s actions, call, email, fax and write him immediately:

Governor Arnold Schwarzenegger
State Capitol Building
Sacramento, CA 95814
Phone: 916-445-2841
Fax: 916-558-3160
governor@governor.ca.gov

If you are facing loss of your home and want to talk about the options, call (951-314-5402) or email (info@dreambigrealestate.com) us right away and we’ll explain the 10 alternatives you have to foreclosure.

(Brian Bean is a real estate broker and ambassador for Helping A Million Homeowners, a nationwide organization that is committed to helping alleviate the financial stress that so many homeowners face today. He can be reached directly at Brian@DreamBigRealEstate.com.)

Brian Bean
Real Estate Professional
www.DreamBigRealEstate.com
www.IEShortSalePros.com
www.HelpingAMillionHomeowners.com

Short Sale Genius Elite

I’ve been specially trained to negotiate short sales with an emphasis on Deficiency Waivers

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