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Can a home purchase remain non-recourse when refinancing in CA?


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2011 Sep 22, 4:30am   1,434 views  2 comments

by LAO   ➕follow (0)   💰tip   ignore  

I've heard most lenders make convert the loan to recourse after refinancing? Can you request that it remain non-recourse or do you think they would balk?

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1   corntrollio   2011 Sep 22, 5:05am  

This is a law issue. The loan is non-recourse under the law if it is purchase money, and is recourse if it is not purchase money. SB1178 didn't pass right? That was a law that would have made refis remain non-recourse if there was no cash taken out.

You can ask to make it non-recourse if it doesn't qualify, but they will laugh at you. Why would they voluntarily give up their rights? Why would it be worth it to them to make it non-recourse unless they charged you a much higher rate?

2   LAO   2011 Sep 22, 5:37am  

I wonder if these low rates and forced refinancing are just to keep everyone in their homes under the banks thumb... I guess if you recently bought and aren't under water refinancing to recourse wouldn't be a big issue.. unless an earthquake wiped your home out and you didn't have earthquake insurance...

Then you couldn't walk away.. and you'd owe on the loan... OR would some sort of disaster relief cover you in that situation?

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