Posted by: Catherine | July 18, 2011

Contra Costa Short Sales just got some good news!


There was great disappointment when Governor Schwarzenegger vetoed SB 1178 last year.  1178 would have protected short sale sellers from continued liability on their deficiency following the settlement.  As we know, many junior lien holders would approve a short sale, and “release the lien” but not the liability on the debt.  Until now… SB 458 was quietly signed into law last week by Governor Brown.

Here is the news release for the California Association of Realtors:  http://www.car.org/newsstand/newsreleases/sb458/

This law picks up where SB931 leaves off.  Right now SB931 prevents lenders from pursuing a deficiency on a first mortgage following the successful completion of a short sale.  Now SB 458 closes the gap with second / junior lenders:

“SB 458 brings closure and certainty to the short sale process and ensures that once a lender has agreed to accept a short sale payment on a property, all lienholders – those in first position and in junior positions – will consider the outstanding balance as paid in full and the homeowner will not be held responsible for any additional payments on the property.”

Now, keep in mind, it may not prevent second lenders from requiring money (from the seller) to settle or approve a short sale.  Second lenders still have an option on recourse debt loans as far as I know (I’m not an attorney however, and you MUST seek advice from an experienced attorney in these matters).  A second lien, saying being owed 120,000 on  recourse debt (i.e. investor loan, home equity loan, home equity lines of credit, etc), could say no to any short sale, allow the first to foreclose and continue their pursuit of the seller after the foreclosure.  Certainly, I hope that is not the trend we start to see.  California has done a pretty good job of keeping in the forefront of consumer protection in these stressful times.  With SB931 and now SB458, short sale sellers have a little more peace of mind when they complete a short sale.

I have a short sale right now, that the seller was just about to settle with a second lender for 30,000 in order for them to release the lien, this law may have come at just the right time for them.  However, so far they are still demanding 10,000 to release the lien and approve the short sale… time will tell this week, if they change their mind altogether, or take a “we’ll take what we can get” approach and approve the deal thereby waiving their right to pursue deficiency per SB458.

Will this help in your short sale decisions in the future?

If you are interested in a short sale in Contra Costa, Alameda and some parts of Solano and San Francisco – give us a call right away!

Contra Costa Short Sales
925-683-2125
Catherine Myers, Broker Assoc
Windermere Bay Area Properties / Short Sales

San Francisco Bay Area, Contra Costa and Alameda Short Sales

Homes for Sale Contra Costa, Alameda County – Search

 


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