Los Angeles, CA – Just in, Governor Brown, signed into law today, SB458. This law will be written in the California Civil Code Procedures under CA CCP Section 580(e).
What this law states is that if a homeowner does a short sale, where the property has a 2nd Trust Deed, that 2nd lender/investor can no longer pursue the homeowner for the deficiency balance if they agree to entertain a short sale. If you recall, SB931, which came into effect as of January 2011, protected California homeowners from their lender/investor from coming after them for the deficiency balance on ONLY the 1st Trust Deed. What SB458 does now is that it encompass the 1st and 2nd Trust Deeds and protects the California homeowner from the possibility of their lender/investor from perusing the deficiency balance.
In Layman’s terms: If the 2nd Trust Deed Lender agrees to the short sale, they’re also agreeing to waive their right to collect on the deficiency balance!
There are two key things to point out here:
1) SB458 does not state that the 2nd TD Lender cannot ask for a cash contribution from the seller at closing.
2) SB458 does not state that the 2nd TD Lender cannot ask for a unsecured note from the seller at closing.
Thanks for reading this, Jennifer Escobar.
Jennifer is a Real Estate Agent at Qwest Real Estate.
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