Is a refinance still a non-recourse loan in California?

Asked by eorr, San Jose, CA Thu Mar 21, 2013

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Ruth and Per…, Agent, Los Gatos, CA
Fri Mar 29, 2013
Hi Eorr

A second lender can foreclose on your home if there is enough equity.
We have worked on several short sales and REOs, where when there is enough equity
in the house, and a 2nd realizes that they will get wiped out in a REO on the Court Steps, they
can start foreclosure proceedings prior to the First.

But always check the Note you signed, talk to your Bank or an Attorney.

Good luck

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1 vote
Terri Vellios, Agent, Campbell, CA
Thu Mar 21, 2013…

The above links may be of interest to you.

If you refinance and took out money it could be considered a recourse loan. You should consult with your lender.
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1 vote
Richard Matu…, Agent, San Jose, CA
Thu Mar 21, 2013
In California residential loans are usually non-recourse loans.However, commercial loans usually have a recourse against the buyers in case of default on the loan.Commercial loans are usually 5 units or more.

Richard Matusich Realtor DRE#00358728
1 vote
Juliana Lee, Agent, Palo Alto, CA
Sun Mar 31, 2013
Senate Bill 1069 is probably what you are asking about…

From CAR legal services:
Anti-Deficiency Protection for Refinance Loans
Homeowners who default on their refinance loans are protected against personal liability for any deficiency following foreclosure. Under existing anti-deficiency law, a borrower is protected from personal liability for a purchase money loan secured by an owner-occupied property with one-to-four residential units. The new law extends that anti-deficiency protection to include any loan used to refinance the purchase money loan, plus any loan fees, costs, and related expenses for the refinance. 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. For purposes of this law, any payment of principal shall be deemed to be applied first to the principal balance of the purchase money loan, and then to the principal balance of any new advance and interest payments shall be applied to any interest due and owing.
Senate Bill 1069 (codified as Cal. Code of Civ. Proc. § 580b(c)) (effective January 1, 2013).

Juliana Lee
cell: 650-857-1000
Top 2 agent nationwide at Keller Williams Realty

Over 30 years experience
Over 1,000 homes sold in Santa Clara and San Mateo Counties
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0 votes
John Juarez, Agent, Fremont, CA
Thu Mar 28, 2013
The protection for refinanced credit transactions does not include a refinance with an additional withdrawal of equity used for a purpose unrelated to the refinance…purchase of a vacation, debt consolidation, wedding expenses, etc.

Of course, that is only my opinion and you should not make any plans or decisions based on that opinion. I am a Realtor and not an attorney. Ditto for you and the others who have answered.

If you want an opinion that you can rely on you should seek that of a professional…an attorney.
0 votes
eorr, Home Owner, San Jose, CA
Thu Mar 21, 2013
The updated code (revised as of January 1, 2013) appears to include refinance credit transactions under the anti-deficiency protection.

Is anyone familiar with this new code? Thanks.
0 votes
charles butt…, Agent, san jose, CA
Thu Mar 21, 2013
As Terri Velios pointed out, if you took cash out, it can be a recourse loan.

I recommend that you read the terms of both the Note and Deed of Trust and your loan documents very thoroughly to make absolutely certain that the terms of your loan are non recourse.

Thank you,
Charles Butterfield MBA
Real Estate Broker/REALTOR
American Realty
Cell Phone: (408)509-6218
Fax: (408)269-3597
Email Address:
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