In a major victory for REALTORS®, 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 www.leginfo.ca.gov.
Information provided from C.A.R
The federal government’s short sale program (Home Affordable Foreclosure Alternatives, or HAFA), recently made changes to the eligibility requirements that could open up the program to more sellers.
The most sought-after benefit of a HAFA short sale is the elimination of the seller’s personal liability on any difference between the sales price of the home and the amount of the mortgage loan.
To be eligible for HAFA, the seller must still demonstrate some kind of financial hardship. However, the lender is no longer required to verify a seller’s financial information or to determine if the borrower’s total monthly mortgage payment exceeds 31 percent of the seller’s monthly gross income.
Another major change to the HAFA program concerns the vacancy of property. Originally, the home had to be currently owner-occupied with a narrow, 90-day exception related to job relocation. In the revised program, the property currently must be or recently have been the seller’s principal residence, but a vacancy for up to 12 months prior to the short sale agreement is allowable, so long as the seller provides documentation that the property was his/her principal residence prior to relocation and the seller has not purchased a residential property in the prior 12 months. The reason for relocation does not need to be connected to re-employment or transfer of employment, and there is no longer a minimum distance requirement.
Looking to buy or sell San Diego real estate? Contact Travis Breton at 760-470-2752 or visit http://sdhomesource.com