New law gives added protection to short-sale hopefuls
On Friday, Gov. Jerry Brown signed Senate Bill 458 (Corbett) into law. The
new law, which contained an urgency clause and became effective upon
signing, protects homeowners pursuing short sales by barring first and
secondary lien holders from going after sellers for money owed after the
short sales close.
Making sense of the story
* A short sale - a transaction in which the homeowner sells the
property for less than is owed on the mortgage - must be approved by the
lien holder or lien holders, if there is more than one.
* Under previous law (SB 931 of 2010), a first mortgage holder could
accept an agreed-upon short-sale payment as full payment for the outstanding
balance of the loan, but the rule did not apply to junior lien holders. SB
458 extends the protections of SB 931 to junior liens.
* The CALIFORNIA ASSOCIATION OF REALTORS(r) (C.A.R.) sponsored the
bill and urged lawmakers to pass this much-needed legislation.
"The signing of this bill is a victory for California homeowners who have
been forced to short sell their home, only to find that the lender will
pursue them after the short sale closes and demand an additional payment to
subsidize the difference," said C.A.R. President Beth L. Peerce. "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
lienholders - 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."
SUNIL SETHI REAL ESTATE
Sunil Sethi / Broker, President, REALTOR, MBA, CPA (inactive)
38750 Paseo Padre Pkwy Suite B3 / Fremont, CA 94536
Cell 510 388 2436 / Fax 510 431 9046
CA DRE#: 01173766