You know what makes me feel warm and fuzzy all over? More than a cat crawling under the bed covers at 5 AM and purring? When a prospective client calls, and I look up the loan in the tax rolls to discover this potential short sale involves a purchase money loan. Because purchase money loans in California are non-recourse. But a purchase money loan doesn't mean it's free sailing for the seller. Not many short sale agents realize that, nor do their sellers.
I handle all sorts of Sacramento short sales. From Lincoln to Galt. From purchase money to hard money. From one loan to 3 loans. From strategic short sales to severe hardships, and HAFA short sales. From rentals to owner-occupied, and even an 8-unit apartment building. And the easiest type of short sale to negotiate by far, for most short sale agents, is typically a purchase money loan. Of course, due to the passage of SB 931, I'm also thrilled for sellers who have a refinanced first mortgage and can close after January 1.
But the thing is doing a short sale with a purchase money loan does not guarantee a release of liability from the bank. Some lawyers have argued that the terms of the loan in a short sale have been altered after a renegotiation with the bank. They say the bank might be allowed to pursue the seller afterward. Just because the short sale approval letter might not reference the right to a deficiency judgment doesn't necessarily mean diddly-squat. Like Dorothy standing outside the gates of Emerald City, you've got to ask for permission to see the Wizard.
The other thing is the bank might ask for a seller contribution. A purchase money loan in California is not a free ticket to Disneyland; it doesn't mean that if you click your heels together three times you'll go home. If a Sacramento short sale agent guarantees you that the bank will not go after you, fire that agent. Because an agent can't give you legal advice much less guarantees. A Sacramento short sale agent should advise a seller to talk with a lawyer. If you've got a question about release of liability regarding a short sale approval letter, for crying out loud, ask a lawyer about it, don't ask an agent.
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