As of July 15, 2011, upon completion of a short sale with lenders’ approval, California law protects homeowners from ALL lenders with unpaid mortgage loan balances on the property after the sale. The old law provided debt deficiency protection from the primary (1st) lien holder only, but not from junior a (2nd ) lienholder, who could still sue the borrower after the short sale. New Senate Bill 458 amends Code of Civil Procedure §580e to provide liability protection to qualifying property owners from ALL mortgage lenders, not just the first lender.
Archive for the ‘Short sales’ Category
NEW LAW PROTECTS HOMEOWNERS FROM LOAN LIABILITY AFTER A SHORT SALE
Tuesday, July 26th, 2011MARS COMPLIANCE FOR REAL ESTATE AGENTS
Tuesday, March 29th, 2011Any real estate agent who negotiates short sales with lenders or promotes their services as a way to help consumers avoid foreclosure is covered by the new Federal Mortgage Assistance Relief Services (“MARS”) rules, and must comply with all requirements regarding mandatory disclosures, misrepresentations and the prohibition against collection of advance fees. [16 CFR 322 et. seq.]
New Law Protects Homeowners from Liability to the 1st Lienholder After a Short Sale – SB 931
Wednesday, February 9th, 2011SB931
LISTING AGENT HAS LEGAL DUTY TO DISCLOSE SHORT SALE STATUS TO BUYER
Monday, November 1st, 2010When a real estate agent is aware that the amount of existing mortgage liens exceeds the sales price of a residential property, such that the property can only be sold by short sale, the agent has a duty to disclose this state of affairs to the buyer, so that the buyer can inquire further and evaluate whether to risk entering into a transaction with a substantial risk of failure. Holmes v. Summer (2010) 188 CA4th 1510. (more…)
NEW LAW PROTECTS HOMEOWNERS FROM LIABILITY AFTER A SHORT SALE FOR THE UNPAID LOAN BALANCE ON THE FIRST DEED OF TRUST
Wednesday, October 13th, 2010Beginning January 1, 2011, any first trust deed lender who approves a short sale of a residential real property, will be prohibited by law from collecting the unpaid loan deficiency after the sale.
ADVISORY: THIS LAW WAS AMENDED ON JULY 15, 2012. SEE THE SLF LEGAL UPDATE DATED JULY 26, 2011.