Recently, I wrote an article on Sacramento Real Estate Voice that breaks down CA SB931 which will take effect on January 1, 2011 in California.
This new California bill is deficiency protection for CA Short Sales of 1-4 units which protects homeowners and investors from recourse on their first mortgages and Deeds of Trust.
Apparently, the banks did not lobby against this bill and some say it is because the banks already have such a bad reputation with the public that they didn't want any further bad publicity.
My guess is that there is more to it than that and the banks will have every intention of requiring a promissory note be signed and or a contribution from the seller of a Short Sale before they will approve the Short Sale. Many times the bank ask for this now but I believe that this will be mandatory with the banks in the future.
Any Short Sale agent worth their salt in my opinion should be postponing Short Sale approvals until after January 1, 2011 to protect their seller who refinanced their 1st mortgage in the State of California.
You can read more at Short Sale Ship is Docking on January 1, 2011 where who and what applies to the protection of a deficiency judgment is spelled out.
As always a CPA and/or attorney should always be consulted by the homeowner/investor prior to deciding what is best for them with a Short Sale or a Foreclosure.
Gena Riede, CDPE working with Sacramento Short Sale sellers who are having difficulty paying their house payment. CA RE License #01310792