The newest law in California is SB 458. This law states that borrowers or owners of residential unit dwellings or properties of one to four units, will not experience any deficiency after a short sale extending to a junior lien holder.
Too good to be true, you’re asking? I have long known that the banks do not care about laws and take many months to implement them, whether they be federal or state government laws. They will march at their own drum. That being said, the new law that is instituted by the State of California is a joke!
Even senior lien holders of properties where there is only one loan, are still asking for a seller contribution. The California Law SB 931, passed in January of this year, clearly states there will be no contribution or deficiency and this new law, SB 458, piggy-backs on the SB 931 law. However, junior liens are still requiring contributions.
So why is this not applying to the junior liens and the SB 458 being enforced? Answer is, the banks want to test the validity of the law, while circumventing any loopholes that are there. The most important part of the new bill: “The bill would prohibit the holder of a note from requiring the trustee, mortgagor, or maker of the note to pay any additional compensation, aside from the proceeds of the sale, in exchange for a written consent to the sale.” This states that they can require seller to pay proceeds of the sale, but I have been successful to date with no seller contributions. The lenders will do whatever it takes to squeeze money out of a transaction, but my track record shows that I have protected 99% of all sellers from contributions. Having an agent or short sale negotiator is now becoming paramount. I tend to avoid recommending many short sale negotiators because they do not have the experience I have in my two decades of short sale negotiating, since a huge problem is often caused in transactions due to the lender being not willing to pay them.
All new laws in real estate that are to help ward off the mess the government technically started by not limiting loan policies a few years ago has made the environment more difficult protecting the American Dream and helping citizens very little who pay their hard-earned money for taxes.
Bottom line–sellers want, and must have, a skilled and experienced agent with a team (assistant, attorney, accountant, escrow and title people) of problem solvers, that can get sellers out of their liability problems including past-due Home Owner Association Fees (which are collectible after bankruptcy filing post-petition or foreclosure). A short sale, when handled by me, will get paid past-due HOA fees with zero contribution by seller 99% of the time, call me today for a consultation, don’t delay!