Schwarzenegger Terminates CA Foreclosure Bill

Gov. Arnold Schwarzenegger vetoed a bill that would have prevented California homeowners associations from foreclosing on member homes over small debts.

The bill, which passed both Houses of California's legislature by a wide margin, was introduced in response to a strong public outcry following a case in which a couple's $285,000 house was auctioned off to recover a $120 debt to their homeowners association.

But Gov. Schwarzenegger said the bill was "overly broad" and could lead to higher assessments from homeowners associations.

Under current California law, non-judicial foreclosure can be used by private communities to collect overdue assessments. The legislation would have required associations to use Small Claims Courts to collect unpaid debts of less than $2,500.

Opponents estimated that attorney fees and collection costs totaling $1,500 to $2,000 per case would have resulted had the bill become law, according to the law firm Lotstein Buckman.

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