Great news for California short sales - Deficiencies g-o-n-e

By
Real Estate Agent with Century 21 Showcase, REALTORS® CalBRE#01385517

LAW AGAINST SHORT SALE DEFICIENCIES EXPANDED


Here is the legal notice just signed by Gov. Brown. - This law is fully set forth as Senate Bill 458 (Corbett) at www.leginfo.ca.gov

 

In a major victory for REALTORS®, Governor Brown signed into law today a C.A.R.-sponsored bill, Senate Bill 458, prohibiting a deficiency after a short sale for one-to-four
residential units, regardless of whether the lender is a senior or junior lienholder.  Effective immediately for transactions closing escrow from this day forward, both senior and junior lienholders cannot require a borrower to owe or pay for a deficiency in a short sale.  This law also prohibits any deficiency judgment to be requested or rendered for senior or junior liens after a short sale of one-to-four residential units.  Any purported waiver of this rule shall be void and against public policy.

 

Although a lender cannot require a borrower to pay any additional compensation in exchange for a short sale approval, the new law does not prohibit a borrower from voluntarily offering a monetary contribution to a lender in hopes of obtaining a short
sale.  A lender is also permitted under the new law to negotiate for a contribution from someone other than the borrower, such as other lenders, agents, relatives, and the like.

 

Exceptions to the new law include a lender seeking damages for a borrower's fraud or waste; a borrower that is a corporation, LLC, limited partnership, or political subdivision of the state; a lien secured by a bond as specified; a public utility lien; and additional rules apply if a note is cross-collateralized by more than one property.

 

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Patti Lyles

DIVORCE, SHORT SALE, FORECLOSURE SPECIALIST
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