A few days ago short sale sellers in California got great news! Governor Brown signed a bill which prohibits lenders and investors of junior loans to pursue a deficiency judgment on most approved short sales. First lien holders are already prohibited from deficiency judgments, but second mortgages and HELOCS were not previously exempted. As of July 15th, they are included. So, if a bank approves your short sale, then they have to give up all rights to going after the borrower for any deficiencies. So if the second lender says they will take $6000 for an $85,000 HELEC, that is all they get. After close they can not come back to the borrower and say we still want more money.
This is great news for short sale sellers in Santa Clara and San Mateo Counties. Certain exceptions apply if the bank can prove fraud, but for most sellers, this is the last piece they need to be able to transition out of their homes and have a chance to start over.
Since California has had such a large percentage of homeowners who owe more on their homes than they are worth, and of those people there are always going to be those who need to sell, this is a welcome relief for huge numbers of homeowners.
If you have any questions about buying or selling short sales please feel free to contact me!
Keller Williams Realty
Federal Government Disclaimer (MARS): 1. You may stop doing business with us at any time. You may accept or reject the offer of mortgage assistance we obtain from your lender [or servicer]. If you reject the offer, you do not have to pay us. If you accept the offer, you will have to pay us commission as agreed to in listing contract for our services. 2. Marcy Moyer of Keller Williams Realty is not associated with the government, and our service is not approved by the government or your lender; and 3. Even if you accept this offer and use our service, your lender may not agree to change your loan.