Foreclosures and Section 580b
What is the rule?
If a house sold in foreclosure fetches less than what's owed on the mortgage, Section 580b of the California Code of Civil Procedure bars lenders from seeking cars, stocks and other assets to make up the difference. This protection applies only to ``purchase'' mortgages used to buy the house -- not refinanced loans.
What happens if I refinance?
Lenders can go to court to pursue other financial assets to make up the difference, or ``deficiency.'' They can attach liens good for 10 years, then renew them.
Who is most at risk?
• Financially stretched home buyers who are counting on refinancing interest-only loans and other exotic mortgages before higher monthly payments kick in.
• Homeowners who lack sufficient insurance to cover devastating losses from earthquakes, landslides and natural disasters.
• Homeowners who refinance to shore up their finances but later lose their homes in foreclosure.
by: Victor Caballero
Mercury News
If a house sold in foreclosure fetches less than what's owed on the mortgage, Section 580b of the California Code of Civil Procedure bars lenders from seeking cars, stocks and other assets to make up the difference. This protection applies only to ``purchase'' mortgages used to buy the house -- not refinanced loans.
What happens if I refinance?
Lenders can go to court to pursue other financial assets to make up the difference, or ``deficiency.'' They can attach liens good for 10 years, then renew them.
Who is most at risk?
• Financially stretched home buyers who are counting on refinancing interest-only loans and other exotic mortgages before higher monthly payments kick in.
• Homeowners who lack sufficient insurance to cover devastating losses from earthquakes, landslides and natural disasters.
• Homeowners who refinance to shore up their finances but later lose their homes in foreclosure.
by: Victor Caballero
Mercury News
posted by Victor Caballero at 7:50 AM
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