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INTRODUCED BY Senator Corbett

FEBRUARY 16, 2011

An act to amend Section 580b of the Code of Civil Procedure,
relating to mortgages.


LEGISLATIVE COUNSEL'S DIGEST


SB 458, as introduced, Corbett. Mortgages: deficiency judgments.
Existing law prohibits a deficiency judgment upon a sale of real
property or an estate for years for failure of the purchaser to
complete the contract of sale or satisfy the obligation underlying a
mortgage or trust deed given to secure payment in specific
circumstances, including if the loan was on a dwelling, as specified,
and the loan was, in fact, used to pay all or part of the purchase
price of the dwelling.
This bill would provide that a loan used to pay all or part of the
purchase price of real property or an estate for years includes a
subsequent loan, mortgage, or deed of trust that refinances or
modifies the original loan, but only to the extent that the
subsequent loan, mortgage, or deed of trust was acquisition
indebtedness, as defined.
Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

SECTION 1. Section 580b of the Code of Civil Procedure is amended
to read:
580b. No deficiency judgment shall lie in any event after a sale
of real property or an estate for years therein for failure of the
purchaser to complete his or her contract of sale, or under a deed of
trust or mortgage given to the vendor to secure payment of the
balance of the purchase price of that real property or estate for
years therein, or under a deed of trust or mortgage on a dwelling for
not more than four families given to a lender to secure repayment of
a loan which was in fact used to pay all or part of the purchase
price of that dwelling occupied, entirely or in part, by the
purchaser.
Where both a chattel mortgage and a deed of trust or mortgage have
been given to secure payment of the balance of the combined purchase
price of both real and personal property, no deficiency judgment
shall lie at any time under any one thereof if no deficiency judgment
would lie under the deed of trust or mortgage on the real property
or estate for years therein.
For purposes of this section, a loan used to pay all or part of
the purchase price of real property or an estate for years shall
include any subsequent loan, mortgage, or deed of trust that
refinances or modifies the original loan, but only to the extent that
the subsequent loan, mortgage, or deed of trust is acquisition
indebtedness as defined in Section 163(h)(3)(B) of Title 26 of the
United States Code.