BILL NUMBER:  SB 1178
  VETOED	DATE: 09/30/2010




To the Members of the California State Senate:

I am returning Senate Bill 1178 without my signature.

This bill, by extending anti-deficiency protection to refinancing,
would fundamentally alter and impair the nature of pre-existing,
previously negotiated mortgage loan contracts.  In addition, the bill
would encourage borrowers to strategically default on loans they
have the capacity to repay simply because the mortgaged properties
have lost value.

This bill's anti-deficiency protection would apply to pre-existing,
previously negotiated mortgage loan contracts that are the subject of
actions filed on or after June 1, 2011.  As a result, this bill
fundamentally alters the nature and impairs the value of previously
negotiated contracts, leading to negative consequences for the value
of those loans held in a lender's portfolio and a deleterious impact
on the secondary market.  Fundamentally altering the nature of a
contract after its consummation is a bad precedent and will provide
uncertainty for future lending transactions.

Sincerely,



Arnold Schwarzenegger