California Governor Signs SB 458 – No Deficiency After Short Sale for Junior Liens

Good news for California homeowners considering a short sale! SB 458 was signed, which is the new California law that extends the protections of SB 931, ensuring that any lender/bank that agrees to a short sale transaction for a residential property from 1 to 4 units, must agree to the short sale payment as payment in full for the outstanding balance of all loans (first/second/third mortgage liens, HELOC, etc.).

What is SB 931 any way? It was a law signed in 2010, which stated that after a short sale transaction is completed in California, lenders/banks cannot pursue the homeowner/seller for the remaining balance of the loan (amount owed minus the sale price). But unfortunately, this rule did not apply to junior lien holders (second/third mortgage or home equity line of credit/HELOC). SB 458 extends the protections of SB 931 to junior liens.

For sellers who conduct a short sale after July 2011, SB 458 means that a short sale junior lien holder cannot require additional compensation (cash contribution, promissory note, etc.) as part of the short sale approval. If needed, the agent still can contribute to make the transaction go through.

SB 458 ensures that after close of escrow in a short sale transaction, there is no possibility that the lender can pursue the borrower/seller. Therefore, the lien and (personal) liability will be released by all lenders involved in a short sale.

These two short sale laws combined with the Mortgage Forgiveness Act, make it perfect for Short Sale transactions to be conducted in California.

If you are behind on your payment or simply need to move to another area but your house is upside down (you owe more than it's worth), give me a call and I will make your transaction as smooth as possible.

Ihor Pochay

BROKER / Short Sale & REO Specialist

Team Pochay Realty

Cell: (562) 334-7393

ihorpochay@hotmail.com

www.TeamPochayRealty.com

www.shortsaleyourhome.blogspot.com

DRE# 01772584