San Ramon Valley Short Sales News – Actually All Californians Get A Break

Homeowners who are unable to sell their homes because of the decrease of property prices in all of San Ramon Valley or make the mortgage payments due to either loss of job, reduced income or change in interest mortgage rates have been left with two choices – let their homes go back to the banks via foreclosure or try and sell their homes on a short sale. And even while most feel a short sale is probably better for them in the long run there has been a concern that later on when the dust settles these homeowners will be faced with deficiency judgments by the lenders collecting the short fall on the mortgages. A previous law was signed earlier this year preventing the first lien holder from pursuing a deficiency judgment but not the second lien holder.  That is no longer an issue as a new law was initiated to prevent the judgments against these homeowners.

According to this article I received from California Association of Realtors today:

“In a major victory for REALTORS®, Governor Brown signed into law today a C.A.R.-sponsored bill, Senate Bill 458, prohibiting a deficiency after a short sale for one-to-four residential units, regardless of whether the lender is a senior or junior lienholder.  Effective immediately for transactions closing escrow from this day forward, both senior and junior lienholders cannot require a borrower to owe or pay for a deficiency in a short sale.  This law also prohibits any deficiency judgment to be requested or rendered for senior or junior liens after a short sale of one-to-four residential units.  Any purported waiver of this rule shall be void and against public policy.

Although a lender cannot require a borrower to pay any additional compensation in exchange for a short sale approval, the new law does not prohibit a borrower from voluntarily offering a monetary contribution to a lender in hopes of obtaining a short sale.  A lender is also permitted under the new law to negotiate for a contribution from someone other than the borrower, such as other lenders, agents, relatives, and the like.

Exceptions to the new law include a lender seeking damages for a borrower’s fraud or waste; a borrower that is a corporation, LLC, limited partnership, or political subdivision of the state; a lien secured by a bond as specified; a public utility lien; and additional rules apply if a note is cross-collateralized by more than one property.

This law is fully set forth as Senate Bill 458 (Corbett) at www.leginfo.ca.gov.”

Probably the biggest question is what about all those short sales that occurred prior to the signing of the bill.  Maybe that will be next on the Governor’s agenda as homeowners in San Ramon Valley that had short sales prior to the signing of this bill need a break as well!

About Linda Urbick Linda

has written 247 articles on this blog.


Tagged with:

Filed under: Short Sales & Foreclosures

Like this post? Subscribe to my RSS feed and get loads more!