Home Front: California Bills Aim to Protect Home Refinancers From Banks

Sacramento Bee
August 20, 2010
Wasserman, Jim

Legislation under consideration in the California Senate would make it more difficult for banks to recoup money from borrowers with refinanced mortgages on homes that are unloaded through short sales or lost through foreclosure. SB 931 aims to protect borrowers with refinanced first-lien loans after short sales, while SB 1178 would institute more protections for borrowers with refinanced first-lien loans after foreclosure. The first bill was introduced in response to the number of borrowers hesitant to proceed with short sales for fear debt collectors will contact them down the road. The California Association of Realtors is pushing the second bill, insisting that borrowers who refinanced were unaware that they no longer had the protections given to them under purchase loans. The measure would cover only borrowers who refinanced to take advantage of lower interest rates, as the banking industry successfully rallied against a provision protecting borrowers of cash-out refinances.
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