"I am a little surprised that no one is able to assist you with this answer."
And what did you consider the answer given a day before yours to be? Why would you post the same answer and state that you are surprised no one has answered?
Here is the link to a video explaining the proposed legislation - http://www.facebook.com/video/video.php?v=1299373613627
SB 1178 (Corbett) will extend anti-deficiency protections to homeowners who have refinanced "purchase money" loans. I would sugest you call, email, contact your local state representatives and urge them to pass this bill.
I am a little surprised that no one is able to assist you with this answer.
If your current loan is a purchase loan and owner occupied it is a non-recourse loan. It will say on your promissory note. Just pull out your loan docs and look on the Deed of Trust and Note.
If your loan is a purchase money loan and non owner occupied then it is a recourse loan. It will say on your note.
In California, all refinanced loans become recourse loans. All HELOCS & HELOANS also become recourse loans. All Commercial loans are also recourse loans.
In order to protect your current 'non-recourse' loan if this is what you indeed have, then you cannot change the terms of the loan or refinance.
Hannah Fliegel, FICO Pro
also then read
Once you refi, it is a recourse loan, and the Senate Bill 1178 was vetoed, so if you default the Banks and IRS can come after you, which generally requires one to file for Bankruptcy.
Read Sb1178 in depth and it will be crystal clear, but as always, you should check with your CPA or
RL: Good. That means you are ABOVE water. Not much need for you to worry about foreclosure. Just do the refi and be happy with the lower interest rate. The fact that you qualify to refi means you are luckier than many homebuyers who cannot refi because their house LTV is too high or they no longer pass debt/income ratios.
I am talking to numerous lenders and most of them do not have answers to my question.
RL: That's because they know you won't like the answer. After you refi, your loan will become recourse.
I want to make sure that my loan remains non-recourse after the refinance. Can someone here help me with this question.
RL: After refi, your loan will become recourse.
RL:BTW, I too am not a lawyer nor do I play one on TV :-)
I think you are having a problem because you are asking the reverse of what is actually the law. The law states what is non-recourse and that is a purchase money, first mortgage on a primary residence. Therefore, since there is no law protecting you if you refinance this mortgage, and it's no longer purchase money, it is assumed that it is recourse as no law states the otherwise or prevents a lender from seeking the deficiency should you default.
Hope that helps, and no, I'm not a lawyer nor do I play on on TV; please do consult one should you find in necessary.
Thanks for the replies. I wanted to know if all refi's loans become recourse by law or is it the lenders prerogative. The answer I received is that by law anytime you do a refi, the loan becomes recourse. I am having a hard time understanding why the law cares about this but it is what it is.
I will have to figure out what the implications of a recourse loan is for a property which has greater value than what is owed to the bank.
And I will keep an eye open for SB1178.