Short Sale Alert: One Loan? No More Deficiencies After a Short Sale in California.
I think this is probably the most significant development for short sale sellers since the housing bust began and frankly it makes me proud to be a Californian. In my mind it was the right thing for the legislature to do. California Senate Bill 931 prevents first lien holders who approve a short sale from then turning around and pursuing the homeowners for the deficiency.
Example – You paid $500,000 for your home. You have one loan. You apply for a short sale and the lender accepts an offer of $250,000 for the home. Previously, you would have to negotiate and negotiate with the lender to explicitly state in their short sale approval letter that they were forgiving the deficiency. Now if they accept the short sale, they are forbidden from pursuing the borrower from the deficiency. This is huge! Unfortunately, it does not extend to second mortgage holders. But this is still a huge step in the right direction and will make the process of short selling your home in California that much easier knowing that after all the waiting and stress, you don’t have to worry about the deficiency if you only have one mortgage loan.
If you are considering a short sale, please review the information on my website: www.SantaMariaShortSales.com If you are ready to list your home as a short sale, contact me at (805) 878-9879 to schedule a consultation.
* Those considering a short sale are advised to consult with their own attorney for legal advice, and their tax professional for tax advice prior to entering into a short sale listing agreement — this blog does not offer legal and tax advice. This blog offers general information only which may not apply to your specific situation.