LAW AGAINST SHORT SALE DEFICIENCIES EXPANDED

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.

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Category : Blog &How's the Market? &REALTORS &Short Sale News

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