SENATE BILL REPORT

SB 6634

BYSenator McCaslin

Revising remedies under certain mortgages and deeds of trust.

Senate Committee on Financial Institutions & Insurance

Senate Hearing Date(s):February 4, 1988

Senate Staff:Benson Porter (786-7470)

AS OF FEBRUARY 4, 1988

BACKGROUND:

A mortgage lender foreclosing on the underlying indebtedness of a mortgage may recover any remaining balance due on the mortgage and costs which remain unsatisfied after the sale of the mortgaged premises.  Similar recovery is possible on a more limited basis for foreclosure on deeds of trust.

It has been suggested that no recovery beyond that realized from the sale of the property should be permitted when the original loan was based on an over-inflated appraisal.

SUMMARY:

When the underlying indebtedness is based on an over-inflated appraisal, the lender is confined to foreclosure on the underlying property and shall not be entitled to a deficiency judgment or other judgment on any remaining balance.

Appropriation:    none

Revenue:    none

Fiscal Note:      none requested