Because today is Dec 31, 2010, most County Recorder's offices are closed throughout California, although, I can't imagine any Sacramento short sale seller wanting to close at the end of December with SB 931 positioned on the horizon. SB 931 is the anti-deficiency law passed in California that says when a lender in first position agrees to a short sale, it cannot pursue the seller for a deficiency judgment. It does not apply to foreclosures.
I'm working on 3 Bank of America short sales at the moment, all of which were scheduled to close this week. In 2 of these short sales, the bank has refused to submit a letter releasing liability. In the 3rd Sacramento short sale, Bank of America issued an amendment to the original short sale letter releasing the seller from liability by removing the deficiency language from its approval letter, but then failed to mention this release in a subsequent extension.
The answer? Roll all 3 into January. Get extensions from Bank of America. Yeah, it's a little disappointing for the buyers who had hoped to be in their new homes by New Year's Eve, but it's better this way, most likely, for everybody.
One of my sellers scoffed when I suggested that Bank of America may have given us the extension because it might not realize that SB 931 is going into effect on January 1. But then I received an email this morning from Bank of America that confirmed my suspicions. SB 931 is probably not yet a priority to Bank of America. But it will be.
Some lawyers have argued that SB 931 is unconstitutional and will be challenged. But at the moment, any seller who has only a first mortgage (hard money or purchase money, makes no difference) and who petitions the bank for a short sale in California next month, should fall under the protection of SB 931, if the bank approves the short sale.
2011 will surely be a bumpy ride. Check out my real estate predictions for 2011.
Happy New Year from your Sacramento short sale agent. While everybody else is toasting with champagne to the New Year, I'll be toasting to SB 931.
Photo: Big Stock Photo