Are refinances of first mortgages also nonrecourse loans in CA with Wells Fargo?

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2 Comments
  1. Reply
    TheMom
    May 17, 2011 at 3:25 am

    No, they are fully recourse loans.

  2. Reply
    Mr Placid
    May 17, 2011 at 4:11 am

    Actually, there is no yes/no answer. It depends on the nature and terms of the refinance, and the surrounding facts and circumstances.

    The more the refinance resembles the original purchase money loan, the more likely a court will consider it to be non-recourse. The more the refinance deviates from the original loan, then the more likely a court will consider it to be recourse.

    So, a straight dollar for dollar refinance, with the same lender, will probably retain non-recourse status. A significant cash out refinance, with a different lender, is more likely to be ruled a recourse loan.

    The state supreme court has never definitively decided the issue. If you’re concerned, consult a property attorney.

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