A short sale is a transaction in which the homeowner owes more on the loan than the property is worth. To sell the home, the lien holder or lien holders must approve the sale because the amount owed to the lien holder will be “short” of what is currently owed by the borrower.
Real estate tracker DataQuick said short sales made up 17.7 percent of Southern California home resales in June.
The new law builds on the protections offered by a previous law, SB 931, which required the first lien holder in a short sale to accept an agreed-upon payment as the full payment for the outstanding loan balance. The previous law did not address junior lien holders.
The new law, which became effective immediately, now prohibits secondary lien holders from pursuing deficiencies after a short sale closes.
“As the economic recession continues to impact Californians, SB 458 will allow homeowners forced to sell at a loss to have closure at the end of the process,” said Corbett, in a statement to the Union-Tribune. “By extending anti-deficiency protection to all loans on a home when a short sale occurs, a homeowner can use a short sale as an alternative to foreclosure or bankruptcy.”
The California Association of Realtors call the bill’s signing a “victory for California homeowners.”
“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 lien holders – 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,” said Beth L. Peerce, president of the Realtors group, in a statement.
For more information please visit: http://www.car.org/newsstand/newsreleases/sb458/
Got Questions? – The Caton Team is here to help. Email us at Info@TheCatonTeam.com or visit our website at http://thecatonteam.com/
Visit us on Facebook: http://www.facebook.com/pages/Sabrina-Susan-The-Caton-Team-Realtors/294970377834
Please enjoy my personal journey through homeownership at http://ajourneythroughhomeownership.wordpress.com/