some lenders to strictly go to a foreclosure.
LAW AGAINST SHORT SALE DEFICIENCIES EXPANDED
In a major victory for REALTORS(r), 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.
This law is fully set forth as Senate Bill 458 (Corbett) at
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