California SB 458

[KungFuJoe]

New Law SB 458 Prohibits Deficiencies on California Short Sales

Basically, from what I can gather, this law prevents any lender to come after you for a deficiency on a short sale if it is approved. I know CA is a non recourse state, but from what I can tell, this law covers ALL loans...non recourse, recourse, money purchase, hard purchase, 1st, 2nd, etc, etc, no exceptions.

Is my assumption accurate?

I also wonder what impact, if any, this has been having on lenders approving short sales based on this knowing that they can't come after you. I imagine it would decrease the chances.

[Evan Bedard]

New Law SB 458 Prohibits Deficiencies on California Short Sales

Basically, from what I can gather, this law prevents any lender to come after you for a deficiency on a short sale if it is approved. I know CA is a non recourse state, but from what I can tell, this law covers ALL loans...non recourse, recourse, money purchase, hard purchase, 1st, 2nd, etc, etc, no exceptions.

Is my assumption accurate?

I also wonder what impact, if any, this has been having on lenders approving short sales based on this knowing that they can't come after you. I imagine it would decrease the chances.

Hello KungfuJoe,

If you type in SB 458 into the google search bar at the top of the page you will find many discussions on this topic from other members here.

[TomEason]

KungFuJoe

Thanks for your post.

As it turns out SB 458 is much ado about nothing. Why do I say this? Because a junior lender must first agree to participate in the SS.

The RE industry reports that the number of completed SS transactions is down, an unintended consequence of this law. Without participation by junior lenders, short sales frequently don't close. As a result, the number of SS transactions in CA has decreased.

[KungFuJoe]

KungFuJoe

Thanks for your post.

As it turns out SB 458 is much ado about nothing. Why do I say this? Because a junior lender must first agree to participate in the SS.

The RE industry reports that SS activity is down as an intended consequence of this law. Without participation by junior lenders, short sales frequently don't close. As a result, the number of SS transactions in CA have decreased.

Does it make a difference if my first and second are from the same lender (both GMAC)?

Even though your chances of completing a SS are reduced, if it does happen to go through, does the law protect any/all home loans in CA regardless if they are recourse or not?

[TomEason]

KungFuJoe

Thanks for your questions.

No, it matters not that both loans are serviced by GMAC. A seller will not enter into a SS transaction without knowing in advance whether or not the junior lender will agree to participate and be bound by the law.

Recourse as well as non-recourse loans are covered.

[troubleinriverside]

KungFuJoe

Thanks for your post.

As it turns out SB 458 is much ado about nothing. Why do I say this? Because a junior lender must first agree to participate in the SS.

The RE industry reports that the number of completed SS transactions is down, an intended consequence of this law. Without participation by junior lenders, short sales frequently don't close. As a result, the number of SS transactions in CA has decreased.

interesting news. i have a neighbor trying to short sale and has 2 loans. it has had a pending offer since last november. i keep waiting for the sign to come down. the house is about $400k underwater