SB1178 denied

Wish I had good news on this serene and warm October night. Nope, Schwarzenegger just vetoed SB 1178, which would have allowed home owners who refinanced their original mortgage without taking cash out, to avoid a "deficiency judgment" in California. What does this mean to the lay-person. If you took cash out of your home after you purchased it, then foreclosed or short sold that home, you are liable for a deficiency judgment in California. So basically, you owe the bank or the IRS money. Of course see your CPA for legal advice.

Since you know I am a stickler for details, let's tackle TARP, real quick. So from this interview below, you will see that the US Government only cares about themselves and their lobbyists, who pay them. Has anyone ever heard of a Congressman getting audited? Me Neither. Please listen to all of it first. For those with no time, like myself, here are the basics.

http://dailybail.com/home/and-now-a-word-from-henry-paulson-pbs-news-hour-interview-no.html


Henry Paulson, out of the graciousness of his big heart, went to congress to lend the banks $700 billion, so that they could "stabilize the credit markets and stimulate lending". So Jim Lehrer asks him in that interview, "banks have the money now and people cannot borrow money....they cannot buy a home or a car, or anything". Paulson's response,...wait for it...wait for it....the object of TARP was to make sure the banks were well capitalized". In other words, Hank wanted to give it to his buddies at 0 % so they could lend back to US at 7 + %. Mr. Paulson used to be CEO of Goldman Sachs, want to know who just happened to be on the list of the 25 largest banks to receive funds.....wow this group is smart....yep Goldman Sachs, Lehman Brothers and AIG. NO, they were not banks before TARP, but within 24 hours, sure enough they were "banks" two days later. Want to know how long it took GS to pay back $10b? They happened to have one of the biggest quarters in US stock history after TARP, so no need to guess. That is Excellent news for stock holders, but what about the executives at Goldman who received close to $242m in bonuses, salary and incentives that year? Did the US tax payer, who lent them the money receive a tax break, a bonus, or a refund? Me neither!

Well, enough bashing the big boys, nothing is going to change for us as we are all just working class fools hoping to win the lottery at this point.

So what does the veto of SB1178 have to do with us? It makes everyone of us liable, should we default on that wonderful cash out refinance. Even if you put 100% of that money into landscaping, upgrades and home improvement, you are liable to the banks and possibly the IRS for the short-fall. Thanks Governator!

If your home was a a primary residence at the time of default, you may be in luck. However, if your property was a rental property at the time of default, contact your CPA for the bad news!