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  • May 7, 2008 at 2:34 PM #200795
    cv2
    Participant

    Thanks HLS. I will count my blessings at 7% 🙂

    What happened to me is that when I refied 5 years ago, my broker gave me a 7% rate, 1.5% above owner-occupied. However, two years after closing, when I called the lender I found out that my loan was marked as owner-occupied. So the broker made tons of money on this loan. Yet I can’t do much about it.

    HLS, with your crystal ball, would you think that rate will rack up quickly? On one hand, with the economy in a slow down/recession, Fed wants to keep interest rate low to stimulate. On the other hand, inflation is rampant and they have no choice but to raise interest rate. Right now they put the economy concern over inflation but for how long?

    May 7, 2008 at 2:59 PM #200711
    DaCounselor
    Participant

    “While HELOCs are recourse, to get recourse the lender has to pursue a judicial foreclosure. Not something likely to happen in California. Once the trustee sale happen it wipes out everything. So unless the HELOC buys out the first and judicial forecloses on the house.. they have no recourse. From a practical point of view, high LTV HELOCs in a declining market in California are non-recourse.”
    _________________________________

    Yes and no. In this instance it sounds like he is considering paying off a non-recourse purchase money 1st with a HELOC. There is CA case law that suggests a no-cash-out re-fi of a non-recourse loan retains the non-recourse characteristic of the original loan. In this instance, the HELOC may be non-recourse. As an aside, if a HELOC is purchase money it is non-recourse.

    A post-purchase HELOC (to pay off CC or buy toys) is a recourse loan and the lender does in fact have recourse even if the 1st forecloses. While the HELOC is “wiped-off” the property, the now unsecured debt still exists and can be turned into a judgment and collected.

    May 7, 2008 at 2:59 PM #200753
    DaCounselor
    Participant

    “While HELOCs are recourse, to get recourse the lender has to pursue a judicial foreclosure. Not something likely to happen in California. Once the trustee sale happen it wipes out everything. So unless the HELOC buys out the first and judicial forecloses on the house.. they have no recourse. From a practical point of view, high LTV HELOCs in a declining market in California are non-recourse.”
    _________________________________

    Yes and no. In this instance it sounds like he is considering paying off a non-recourse purchase money 1st with a HELOC. There is CA case law that suggests a no-cash-out re-fi of a non-recourse loan retains the non-recourse characteristic of the original loan. In this instance, the HELOC may be non-recourse. As an aside, if a HELOC is purchase money it is non-recourse.

    A post-purchase HELOC (to pay off CC or buy toys) is a recourse loan and the lender does in fact have recourse even if the 1st forecloses. While the HELOC is “wiped-off” the property, the now unsecured debt still exists and can be turned into a judgment and collected.

    May 7, 2008 at 2:59 PM #200779
    DaCounselor
    Participant

    “While HELOCs are recourse, to get recourse the lender has to pursue a judicial foreclosure. Not something likely to happen in California. Once the trustee sale happen it wipes out everything. So unless the HELOC buys out the first and judicial forecloses on the house.. they have no recourse. From a practical point of view, high LTV HELOCs in a declining market in California are non-recourse.”
    _________________________________

    Yes and no. In this instance it sounds like he is considering paying off a non-recourse purchase money 1st with a HELOC. There is CA case law that suggests a no-cash-out re-fi of a non-recourse loan retains the non-recourse characteristic of the original loan. In this instance, the HELOC may be non-recourse. As an aside, if a HELOC is purchase money it is non-recourse.

    A post-purchase HELOC (to pay off CC or buy toys) is a recourse loan and the lender does in fact have recourse even if the 1st forecloses. While the HELOC is “wiped-off” the property, the now unsecured debt still exists and can be turned into a judgment and collected.

    May 7, 2008 at 2:59 PM #200806
    DaCounselor
    Participant

    “While HELOCs are recourse, to get recourse the lender has to pursue a judicial foreclosure. Not something likely to happen in California. Once the trustee sale happen it wipes out everything. So unless the HELOC buys out the first and judicial forecloses on the house.. they have no recourse. From a practical point of view, high LTV HELOCs in a declining market in California are non-recourse.”
    _________________________________

    Yes and no. In this instance it sounds like he is considering paying off a non-recourse purchase money 1st with a HELOC. There is CA case law that suggests a no-cash-out re-fi of a non-recourse loan retains the non-recourse characteristic of the original loan. In this instance, the HELOC may be non-recourse. As an aside, if a HELOC is purchase money it is non-recourse.

    A post-purchase HELOC (to pay off CC or buy toys) is a recourse loan and the lender does in fact have recourse even if the 1st forecloses. While the HELOC is “wiped-off” the property, the now unsecured debt still exists and can be turned into a judgment and collected.

    May 7, 2008 at 2:59 PM #200841
    DaCounselor
    Participant

    “While HELOCs are recourse, to get recourse the lender has to pursue a judicial foreclosure. Not something likely to happen in California. Once the trustee sale happen it wipes out everything. So unless the HELOC buys out the first and judicial forecloses on the house.. they have no recourse. From a practical point of view, high LTV HELOCs in a declining market in California are non-recourse.”
    _________________________________

    Yes and no. In this instance it sounds like he is considering paying off a non-recourse purchase money 1st with a HELOC. There is CA case law that suggests a no-cash-out re-fi of a non-recourse loan retains the non-recourse characteristic of the original loan. In this instance, the HELOC may be non-recourse. As an aside, if a HELOC is purchase money it is non-recourse.

    A post-purchase HELOC (to pay off CC or buy toys) is a recourse loan and the lender does in fact have recourse even if the 1st forecloses. While the HELOC is “wiped-off” the property, the now unsecured debt still exists and can be turned into a judgment and collected.

    May 7, 2008 at 4:31 PM #200777
    LarryTheRenter
    Participant

    So are you saying that a regular no cash out refi (not a HELOC) of an original loan is also a non – recourse loan???

    just curious

    May 7, 2008 at 4:31 PM #200818
    LarryTheRenter
    Participant

    So are you saying that a regular no cash out refi (not a HELOC) of an original loan is also a non – recourse loan???

    just curious

    May 7, 2008 at 4:31 PM #200845
    LarryTheRenter
    Participant

    So are you saying that a regular no cash out refi (not a HELOC) of an original loan is also a non – recourse loan???

    just curious

    May 7, 2008 at 4:31 PM #200869
    LarryTheRenter
    Participant

    So are you saying that a regular no cash out refi (not a HELOC) of an original loan is also a non – recourse loan???

    just curious

    May 7, 2008 at 4:31 PM #200904
    LarryTheRenter
    Participant

    So are you saying that a regular no cash out refi (not a HELOC) of an original loan is also a non – recourse loan???

    just curious

    May 7, 2008 at 5:57 PM #200907
    DaCounselor
    Participant

    “So are you saying that a regular no cash out refi (not a HELOC) of an original loan is also a non – recourse loan???”
    __________________________________

    I don’t know of a specific ruling in CA that states “a no-cash-out refi of a purchase money loan is a non-recourse loan.” I also have not seen a specific ruling that suggests a no-cash-out refi is automatically a recourse loan. The cases I have seen are not precisely on point but do seem to suggest that a determining factor is cash-out or no-cash-out.

    The legislative intent of the governing statutory section – CCP 580b – supports a public policy against deficiency judgments. The section refers to the financing of the “purchase price” – which can be construed to include a no-cash-out refi. That’s what a no-cash-out refi is, after all – financing the purchase price.

    May 7, 2008 at 5:57 PM #200948
    DaCounselor
    Participant

    “So are you saying that a regular no cash out refi (not a HELOC) of an original loan is also a non – recourse loan???”
    __________________________________

    I don’t know of a specific ruling in CA that states “a no-cash-out refi of a purchase money loan is a non-recourse loan.” I also have not seen a specific ruling that suggests a no-cash-out refi is automatically a recourse loan. The cases I have seen are not precisely on point but do seem to suggest that a determining factor is cash-out or no-cash-out.

    The legislative intent of the governing statutory section – CCP 580b – supports a public policy against deficiency judgments. The section refers to the financing of the “purchase price” – which can be construed to include a no-cash-out refi. That’s what a no-cash-out refi is, after all – financing the purchase price.

    May 7, 2008 at 5:57 PM #200976
    DaCounselor
    Participant

    “So are you saying that a regular no cash out refi (not a HELOC) of an original loan is also a non – recourse loan???”
    __________________________________

    I don’t know of a specific ruling in CA that states “a no-cash-out refi of a purchase money loan is a non-recourse loan.” I also have not seen a specific ruling that suggests a no-cash-out refi is automatically a recourse loan. The cases I have seen are not precisely on point but do seem to suggest that a determining factor is cash-out or no-cash-out.

    The legislative intent of the governing statutory section – CCP 580b – supports a public policy against deficiency judgments. The section refers to the financing of the “purchase price” – which can be construed to include a no-cash-out refi. That’s what a no-cash-out refi is, after all – financing the purchase price.

    May 7, 2008 at 5:57 PM #201001
    DaCounselor
    Participant

    “So are you saying that a regular no cash out refi (not a HELOC) of an original loan is also a non – recourse loan???”
    __________________________________

    I don’t know of a specific ruling in CA that states “a no-cash-out refi of a purchase money loan is a non-recourse loan.” I also have not seen a specific ruling that suggests a no-cash-out refi is automatically a recourse loan. The cases I have seen are not precisely on point but do seem to suggest that a determining factor is cash-out or no-cash-out.

    The legislative intent of the governing statutory section – CCP 580b – supports a public policy against deficiency judgments. The section refers to the financing of the “purchase price” – which can be construed to include a no-cash-out refi. That’s what a no-cash-out refi is, after all – financing the purchase price.

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