Financing in 95129>Question Details

kk2hgo, Home Owner in San Jose, CA

I have 5/1 ARM 6.5% 5 years ago and now got rate change to 2.7%. Does this mean my loan change from non-recourse loan to recourse loan?

Asked by kk2hgo, San Jose, CA Fri Jan 4, 2013

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thank you very much for all response.
1 vote Thank Flag Link Tue Jan 8, 2013
Mitchell brings up a great point, your current loan had a 5 year fixed rate period before going to a 1-year adjustable loan rate - it's very possible that all that has happened is that your loan interest rate has switched to an adjustable index which is lower than your previous fixed rate IS NOT a refinance.

As Terri suggests, contact your lender and ask if this is what has taken place. Note, that as the economy improves we will see all financing indices rise, so you MAY want to talk with a Mortgage professional to see if a refinance is a good conservative move for you or not.
1 vote Thank Flag Link Fri Jan 4, 2013

Up until Dec 31st 2012 I believe non-recourse protection only applied to purchase money loans; if the Seller ever refinanced during ownership non-recourse protection is gone.

Now, as of Jan 1, 2013 Senate Bill 1069 [ Cal. Code of Civ. Proc. § 580b(c) ] kicks in whereby Homeowners who default on their refinance loans (one-to-four residential units) are protected against personal liability for any deficiency following foreclosure. The anti-deficiency protection, however, DOES NOT extend to any cash out in a refinance. This new law only applies to refinance loans or other credit transactions used to refinance a purchase money loan, or subsequent refinances of a purchase money loan, that are executed on or after January 1, 2013.

The federal Mortgage Debt Relief Act of 2007 allows taxpayers to exclude income from the discharge of debt on their PRINCIPAL residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief. This provision applies to debt forgiven in years 2007 through 2012.

However, as part of the "Fiscal Cliff" negotiations The American Tax Payer Relief Act of 2012 was passed by the US Congress January 1st of 2013 and is expected to be signed by the President. When it becomes law it will extend the Mortgage Debt Relief Act to January 1st of 2014.

The State of California has a similar law enacted April 12, 2010, SB 401, called the Conformity Act of 2010 covering January 1, 2009, and before January 1, 2013. As of this posting, I have not found a CA extension to 2014.

1 vote Thank Flag Link Fri Jan 4, 2013

If you have the same loan at a lower rate, then you still have a non-recourse loan. If you have a new loan, i.e. you refinanced, you have a recourse loan.

Mitchell Pearce
1 vote Thank Flag Link Fri Jan 4, 2013
You should ask your lender.
Web Reference:
1 vote Thank Flag Link Fri Jan 4, 2013
You need to check the original terms of your note and/or your original lender.
0 votes Thank Flag Link Tue Jan 8, 2013
Agree with the rest - contact your lender.
0 votes Thank Flag Link Sun Jan 6, 2013
Request your lender to see the Note, read it carefully and go from there. Everything must be in writing, black and white.
0 votes Thank Flag Link Sat Jan 5, 2013
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