California’s real estate association is warning people who lose — or are in danger of losing — their homes to foreclosure that they could face a hefty lawsuit from the lender, even after handing over the keys.

California law has protected borrowers from so-called “deficiency” liability, where in essence the house serves as collateral for the loan, for their original mortgages since the 1930s.

But if consumers refinanced their original mortgage — even for a lower interest rate or to finance home improvements — and fail to make payments leading to foreclosure, lenders can sue for the difference between the money owed and the value of the property, according to the California Association of Realtors. For example, if a homeowner has $200,000 outsanding for a refinanced mortgage and the lender forecloses on the house with the property valued at $150,000, the former homeowner could be liable for the remaining $50,000.

“Most homeowners have no idea they are personally liable,” CAR president Steve Goddard said in a news release Tuesday. “Foreclosure is difficult enough on a family. Getting sued for tens of thousands of dollars after losing your home is much worse.”

The state association has sponsored legislation — Senate Bill 1178 by state Sen. Ellen Corbett, a Democrat from Los Angeles — to close the loophole.

Corbett says many homeowners are not aware of the law, which allows banks to seek funds for refinanced loans. The bill only affects refinanced mortgages.

“Lenders have a responsibility to ensure that borrowers understand loan terms and can meet them,” Goddard said. The bill “puts in place much-needed consumer protections and deserves swift passage by the California Legislature next w