California's Realtors are urging Gov. Arnold Schwarzenegger to sign legislation that partly extends the state's protections against deficiency judgments to homeowners who have refinanced their properties.
Under existing law, the liability of a borrower who defaults on a purchase money mortgage is limited to the value of the property itself at the time it is sold by the lender.
However, owners who have refinanced the original debt, even if it was simply to obtain better terms, are not extended the same protections.
Late last week the California State Assembly voted 49 to 14 to pass a bill that would extend the antideficiency protection to cover refinancings, up to a maximum that cannot exceed the original loan amount.
Cashout debt used for home improvements or consumer expenses is not protected by the measure, nor is additional debt secured by the property, used for such purchases as a home improvement.
In calling on the governor to quickly sign the bill, Steve Goddard, president of the California Association of Realtors, said the measure was a "victory" for homeowners in the state.
If the bill is signed the law would go into effect in June of next year.