Help may be on the way for California short sale sellers in the form of two great bills that could help short sale sellers concerned with deficiency judgments on their short sales.
You see, sometimes when participating in a short sale transaction and receiving short sale approval, the approval letter may include some language about the lenders intentions with regard to the unpaid balance. Many short sale sellers are concerned that they may be liable for the remaining unpaid balance. These two Senate Bills address the concerns of California short sale sellers.
Senate Bill 931
In Senate Bill 931 (which has already passed in both the Senate and the Assembly) California short sale sellers will be exempt from a deficiency judgment—even if the loan was made by a private or hard money lender. This bill applies to owner-occupied and and investment property, just as long as the subject property is one to four units. For more details on this bill, click Senate Bill 931.
Senate Bill 1178
Senate Bill 1178 helps to assure that homeowners who have refinanced their homes are allowed the same “anti-deficiency” protections they have in the original loan. Under current law, even if the borrower was refinancing only to improve upon a current interest rate, the borrower forfeits his/her protections and becomes personally liable on the new note. SB 1178, if signed by our Governor, will extend anti-deficiency protections to those who have refinanced their loans. For more details on this bill, click Senate Bill 1178.
In addition to these great bills in the state of California, all participants in a short sale may be eligible for our government’s HAFA short sale program or the Mortgage Debt Relief Act of 2007.