Insurers Could Drop Fire Coverage in California

California wildfires continue to scorch the Golden State’s southern cities, and now officials in the state fear that some insurers will drop homeowners’ coverage.

Wildfires in Southern California and earlier this fall in northern California have resulted in billions of dollars in claims. In the Sierra Nevada foothills, many homes were dropped after wildfires swept through in recent years, and some northern California homes also have seen their coverage dropped, California Insurance Commissioner Dave Jones told Reuters.

“We may see more of it,” Jones cautions.   Wow, don’t most insurance companies cover more than just California?

PS: Insurers are required to renew fire victims’ policies once. After that, homeowners could then be forced to go to specialty insurers, known as “surplus line carriers.”  Those policies can sometimes cost up to 40 percent more!

Source: “As California Fires Blaze, Homeowners Fear Losing Insurance,” Reuters/CNBC (Dec. 18, 2017)

Several States Try to “Stall Foreclosures”

Twenty-five states have bills in front of lawmakers that seek to make it more challenging for banks to foreclose on home owners, The Wall Street Journal reports. But lenders argue that the bills are roadblocks that are hindering a housing recovery.

California state lawmakers have approved a bill that would apply a set of stricter rules on mortgage servicers who foreclose on home owners and open servicers up to new legal liabilities. While some say it will help ensure the foreclosure process is more fair and transparent, others have argued that it will lengthen the process of foreclosures in the state. The bill still must be approved by the state’s governor to go into effect.

“Should all 50 states decide to go down their own path, lenders are going to have multiple processes, each with their own little nuances, and every single penny of that cost will be borne by tomorrow’s borrowers,” David Stevens, chief executive of the Mortgage Bankers Association, told The Wall Street Journal.

What’s more, the mortgage industry says the bills do little to truly help borrowers avoid foreclosure altogether but rather just drag out the process.

“It would allow consumers to extend, in theory payment-free, the entire proceeding for months while waiting for the deliberation of the modification effort,” Stevens says.

Source: “Banks Face Foreclosure Regulation by States,” The Wall Street Journal (July 1, 2012), and “California Homeowner Bill of Rights Passes, Sent to Governor,” HousingWire (July 2, 2012)

California, “reintroducing anti-deficiency protection bill”

California Association of Realtors is sponsoring SB 458 (Corbett), a re-introduction of SB 1178 (Corbett) from 2010, which proposes to extend anti-deficiency protections to cover the refinance of purchase money mortgages that include debt incurred to acquire, construct or improve the home for homeowners facing foreclosure.

A loophole in the law has allowed California homeowners, already facing the possibility of foreclosure, to be sued by their lender for the difference between the value of the foreclosed property and the outstanding balance on the mortgage loan.  SB 1178 would have closed that loophole and expanded anti-deficiency protections to consumers who have refinanced their original mortgage loans and now are facing foreclosure.

During the 2010 legislative session, C.A.R. sponsored SB 1178 and urged REALTORS® and their clients to call their senator to vote “yes” on SB 1178.  Although this bill was approved by Congress, it was ultimately vetoed by Gov. Schwarzenegger. 

Other articles about real estate in the Sacramento and Placerville, California regions at:

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Foreclosed homeowners could owe ‘tens thousands of dollars’ to lenders

Facing the possibility of foreclosure, California homeowners may be hit with more than just losing their homes. Due to a loophole in state law, they also can be sued by their lender. To prevent this, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) is sponsoring Senate Bill 1178 by State Sen. Ellen Corbett (D-San Leandro), which will extend anti-deficiency protection for consumers who have refinanced their original mortgage loans and now are facing foreclosure.


• Currently, if a homeowner defaults on a mortgage used to purchase his or her home — known as a “purchase money mortgage” — the homeowner’s liability on the mortgage is limited to the property itself. Unfortunately, the original law did not extend the purchase money protection to loans that refinance the original purchase debt, even if the refinance only was to obtain a lower interest rate.

• Californians who refinance a property currently do not have protection if they default on a mortgage greater than the property’s value. Called a “deficiency” liability, under current California law, the lender can sue the former homeowner for the amount of the deficiency even after taking back the property.

• Recent years of low interest rates and aggressive marketing campaigns by lenders have induced tens of thousands to refinance mortgages. Few homeowners realized that by refinancing their mortgage, they were forfeiting their protections and now are personally liable.

• C.A.R. created a video detailing Senate Bill 1178. The video can be viewed here.

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