what about 2nd loans if they were part of the initial purchase of the house? like you know, 80/10 mortgages they also no-recourse in CA?
The answer is YES, the 2nd would also be non-recourse. Many Joe Schmucks in California bought overpriced homes in San Bernardino, Riverside and Central California counties with the following type of 100% financing: 80% 1st trust deed that was adjustable, pay option (monthly payments of as little as 2% interest only. They also initially qualified for the loan based on these monthly payments), with negative amortization. 20% 2nd trust deed, usually fixed for 5 to 7 years. Now with home prices spiraling downward, Joe can just walk away and not have to worry. Let the banks take care of the problem, they have lots of money! Interestingly enough, with all the talk of the little old lady being thrown out of her house by foreclosure, some California legislators have thought about taking action. Some legislators are thinking of drafting a new law that would extend the non-recourse provisions of California Civil Code 580b to include refinanced loans. This way everyone could just walk away from their house with only a ding on their credit report...
lol I guess california is screwed if i had a place that had 0% equity in, and it had halved in value, i would walk for sure, no doubt about it (ironcially i think the more cash you have, the more incentive you have to just walk and buy a new place for cash) the banks must know this, and they must be cr*pping in their pants