Anti Deficiency protection legislation heads to Governor’s desk
This important legislation (SB 1178) passed the California State Assembly and is now heading to Gov. Schwarzenegger’s desk for his signature before it becomes law. This particular legislation is immensely important during these economically difficult times where homeowners are often facing foreclosure.
This legislation attempts to protect homeowners who, in an effort to obtain lower interest rates through re-financing their loans, lost an important legal protection that limited the lenders to no more than the collateralized property during the foreclosure process. The loss of this protection essentially gave the lending institutions a second bite at the homeowners; not only were they able to take their homes through foreclosure, but they reserved their right to come after the homeowners for the full deficiency value between what was borrowed and what the property eventually sold for. The fact that the lenders would not take into consideration the depreciated market value of the property was an additional slap on the face to the distressed and now homeless borrowers.
As a matter of clarification, it is important to point out that this legislation protects the status of those who re-financed their purchase money loan to obtain lower rates. It DOES NOT protect those homeowners who obtain cash-out loans and do other things like pay down credit cards or start businesses; activities unrelated to the purchase or maintenance of their homes.
As a San Jose Short Sale Agent, I see this heart-breaking scenario more than I care to mention. Homeowners who simply wanted to lower their interest rates find out during the foreclosure process that they had given up this incredibly important anti-deficiency protection; a protection they certainly would not have given up had they been made aware that a re-finance would trigger said loss. This is one of those legislations that is the right thing to do.
Governor Schwartzenegger signs into law California Homebuyer Tax Credit!
Just got a letter from CAR President announcing that Gov. Schwartzenegger signed into law AB 183 which will provide up to $200 Million tax credit to home buyers of both new and existing homes that are purchased between May 1, 2010 – December 31, 2010.
Highlights:
* principal residence
* credit equal to $10,000 or 5% of purchase price, whichever is lesser amount
* credit to be taken in equal amounts over 3 years
* must live in home for at least 2 years
With the Federal First Time Home Buyer Tax Credit set to expire if the buyer is not in contract by April 30,2010, this is the perfect complementary plan to continue to encourage California Home owners to purchase throughout the remaining year so that we can continue to deplete the excess inventory of distressed properties that are out there and will continue to hit the market place in the months to come.
Fantastic Job Governator!
