"Under what circumstances is the lender prohibited from going after the "deficiency balance" ?" CA Short Sale Q & A. Series 4.

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Real Estate Agent with www.LiveWorkSiliconBeach.com, Santa Monica Real Estate :) 01761439
http://actvra.in/qLC

"Under what circumstances is the lender prohibited from going after the "deficiency balance" ?" CA Short Sale Q & A. Series 4. Deficiency Balance is defined in a previous post.

Q 4.  Under what circumstances is the lender prohibited from going after the "deficiency balance" as defined in Question 3 after a short sale? 

With the passage of SB 458, effective July 15, 2011, after the short sale of a residential property of one-to-four units, the holder of any senior or junior deed of trust cannot pursue the borrower (seller) for any deficiency under the note. If the lender consents to the short sale in writing, as long as the proceeds of sale were tendered to the lienholder as per the buyer and seller's agreement, then no deficiency can be collected or is even owed, and no deficiency can be rendered or even requested. The borrower (seller) is protected even if the loan is refinanced as long as it's secured by a trust deed. 

An exception to SB 458 occurs if the borrower (seller) has committed fraud with respect to the sale of the property or has committed "waste" of the real property (e.g., severely damaged the property) (Cal. Code Civ. Proc. § 580e (b)). Under these circumstances, the borrower (seller) may still be liable for the deficiency balance.

Note:  SB 458 doesn't apply if the borrower (seller) is a corporation or political subdivision of the state (Cal. Code Civ. Proc. § 580e (c)).    

 

If you have further questions please call Kristine, 310-737-8173.  

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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Jim Frimmer 01/05/2012 08:56 AM
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Ambassador
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Debbie Laity
Cedaredge Land Company - Cedaredge, CO
Your Real Estate Resource for Delta County, CO

I hope more states adopt a law similar to this one. It's really difficult to get the lender to agree to NOT pursue a deficiency judgement.

Jan 05, 2012 08:47 AM #1
Rainmaker
1,113,765
Jim Frimmer
HomeSmart Realty West - San Diego, CA
Realtor & CDPE, Mission Valley specialist

Thanks for posting this. I was just about to do the same thing when your post showed up on the dashboard. "Why write what has already been written when ActiveRain has a reblog button?" I asked myself. Answer: "Don'! Reblog!" So I did.

Jan 05, 2012 08:58 AM #2
Rainmaker
259,435
Kim & Kristine Halverson
www.LiveWorkSiliconBeach.com, Santa Monica Real Estate :) - Santa Monica, CA
Realtors

Debbie: I agree homeowners need more support in regards to deficiency judement.  Kristine

Jan 05, 2012 09:05 AM #3
Rainmaker
259,435
Kim & Kristine Halverson
www.LiveWorkSiliconBeach.com, Santa Monica Real Estate :) - Santa Monica, CA
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Jim:  THANK YOU!  :) Kristine

Jan 05, 2012 09:08 AM #4
Rainmaker
798,842
Debbie Walsh
Shahar Management - Middletown, NY
Hudson Valley NY Real Estate 845.283-3036

Very good information-it seems more and more they are trying to collect these balances. 

Jan 06, 2012 04:55 AM #5
Rainmaker
259,435
Kim & Kristine Halverson
www.LiveWorkSiliconBeach.com, Santa Monica Real Estate :) - Santa Monica, CA
Realtors

Debra:  Thanks!  It hasn't happened here yet.  Mainly false alarms from incorrect bank reporting.  Kristine

Jan 06, 2012 08:35 AM #6
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