fred-corbalisOn Friday, October 1st, Governor Schwarzenegger vetoed SB 1178, which would have extended anti-deficiency protection under Section 580(b) to include refinance loans which replaced loans which were qualified purchase money.

The bill would have prevented lenders from obtaining deficiency judgments against homeowners living in their homes and who default on their loan which was either the original loan used to acquire the property or a refinance loan which was taken out to replace such a loan.

This is probably the correct move from a long-term economic standpoint albeit a decision which will cause some homeowners to feel greater pain beyond just losing their home to foreclosure.

Hard times indeed.