New Short Sale Law to Defend Homeowners From Deficiency

New Brief Sale Law to Safeguard Homeowners From Deficiency February 24, 2011 By Phill Grove Leave a Comment

SB 931 is a new brief sale law designed to protect California homeowners from deficiency judgments.

New Brief Sale Law I read a superior article on the internet from Stephen McMullen, a lender out of California, about the new California brief sale law getting passed to protect the homeowners from deficiency judgments. A deficiency judgment is when the bank sues the homeowner for the difference amongst the mortgage note and the sales price. For example, if a homeowner had a mortgage of $200,000 and the home sold through brief sale for $150,000, the bank could sue the distressed, homeless homeowner for the $50,000. Obviously, a new brief sale law to protect the homeowner is required. What is the new brief sale law? The new brief sale law SB 931 took force January 2011. This brief sale law brought protection for homeowners from deficiency on initial mortgages. This law does not handle second mortgages or non-invest in income loans. What represents a invest in income loan? A invest in income loan constitutes a loan that was drawn out for the original invest in of the residence. This contains each 1st and 2nd mortgages in use for the invest in of the household. What is a non-invest in income loan? A non-invest in income loan is 1 that has been taken out immediately after the original invest in of the property. Equity lines of credit would be the most common kind of non-invest in income loan. The following is a different variation of the new brief sale law: 580e. (a) No juridical decision shall constitute rendered for any deficiency under a note secured by a 1st deed of trust or 1st mortgage for a house of not much more than 4 units, in any case in which the trustor or mortgagor sells the dwelling for less than the remaining amount of the liability due at the time of brief-sale agreement with the composed consent of the bearer of the 1st deed of trust or 1st mortgage. Composed consent of the holder of the initial deed of trust or initial mortgage to that sale shall obligate that holder to accept the sale proceeds as full payment and to fully discharge the remaining amount of the debt on the 1st deed of trust or 1st mortgage. Whenever the trustor or mortgagor commits either fraud with regard to the brief-sale of, or waste with regard to, the real property that secures the initial deed of trust or initial mortgage, this section shall not restrict the capability of the holder of the initial deed of trust or initial mortgage and seek damages and use existing rights and remedies against the trustor or mortgagor or any 3rd party for fraud or waste. (c) This section shall not apply if the trustor or mortgagor is a corporation or political subdivision of the state. Spotlights of the new practice of law: a. If a lender gives written consent to a brief-sale on a initial mortgage, the lender ought to consent the brief-sale proceeds as full payment. b. Applies to all 1st mortgages Exceptions: Fraud ii. Waste (harm) d. It cannot be retroactive. 4. New opinion on foreclosure in CA: a. Lenders are barred from further lender action if they use a non-judicial foreclosureregardless of the of loan kind (non-recourse or recourse)! b. Most foreclosure in CA are non-judicial 5. Summary: Commencing Jan. 1, 2011, if a initial lien position brief-sale lender accepts a brief-sale or completes a non-judicial foreclosurethey are finished! The brief-sale procedure has come a extended way and I conceptualize there will continue to be protection for the homeowner in relation to* anti deficiency laws and tax laws. There is a lot of homeowners that have been confronted with a brief-sale on their house that we will need to do something. The thought of lenders coming immediately after former homeowners for deficiency judgements would be adverse. /sb-931-takes-effect-new-brief-sale-law-protecting-homeowners/ New Brief Sale Law Summary In conclusion, though I don't think that homeowners ought to be rewarded for going via brief sales or foreclosures, distressed families that have just lost their houses should not be subject to brief sale deficiency judgments either. There's only so significantly blood to squeeze from a turnip, and the banks have been gifted trillions of dollars from taxpayers to assist with these deficiencies (that are rather getting passed out to bank execs as record breaking bonuses). Therefore, I am happy to see this new brief sale law and hope distressed homeowners receive protection from the lawsuits.

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