Wednesday, October 12, 2011

California - What you need to know about Senate Bill 458 in regards to short sales

Have you heard about SB458? It’s huge! Passed in July of this year, the law effectively eliminates deficiency judgments against homeowners who short sale their property in California, even from junior lienholders!  In other words, if you have more than one loan on your property and you short sale it, the lenders may not come after you for a deficiency judgment.

  Additionally, the short sale lenders are no longer allowed to ask homeowners to add cash or a promissory note in order to complete the short sale. 

This law only applies to residential dwellings of one to four units, so commercial properties are not included.  Also, the law specifies that if a homeowner doing a short sale damages the property, the lender may still seek damages.

Keep in mind that this law states that no deficiency judgment will be owed if  a short sale is done with the written consent of the lender, but  it does NOT apply to foreclosures. You may want to talk to an attorney about the legal implications of foreclosures.

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