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SB 931 California Deficiency Judgments After A Short Sale Passed
Senate Bill 931 (SB 931) pertaining to California Short Sale Deficiencies was signed by the Governor on September 30th. Beginning January 1st, 2011 any first mortgages that accept a short sale will not be able to obtain a deficiency judgment against a seller after the completion of a short sale.  If a lender provides written consent to a short sale on a first mortgage, they lender must accept the sales proceeds as full payment and discharge the remaining balance due on the loan.  The new law will apply to all first mortgage loans secured by one to four residential units, including purchase money, hard money and refinanced loans.   The new law does not prevent the lender from seeking damages for fraud or waste by the borrower.
The legislative counsel's summary of the bill follows:
"This bill would prohibit a deficiency judgment under a note secured by a first deed of trust or first mortgage for a dwelling of not more than 4 units in any case in which the (owner) sells the dwelling for less than the remaining amount of the indebtedness due at the time of sale with the written consent of the holder of the first deed of trust or ... more

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