SB 1178, the bill passed by the Cailfornia State Senate by a 30-4 vote, is on its way to the Assembly.

The new intent:

This bill preserves a borrowers protection from a deficiency judgment when loans are refinanced, but only to the extent that the refinance is used to pay debt incurred to purchase the real property. The provisions of this bill become operative on June 1, 2011.

Yes, there was an amendment slipped in last week that eliminated the cash-out refinances, even those used for home improvement.  The current bill is only applies to those who refinanced the mortgage used to purchase the home. 

Will there be borrowers who will wait until June 1, 2011 to default on their rate-and term refinance, just so there’s no recourse?  It sounds more like the tax credits, it’ll be extra cheese for those who happen to default beginning in 3Q11.


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