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New Anti Recourse Law SB 458 Extends Short Sale Anti-Recourse Protections of SB 931 to all Junior Mortgages



Will I have To Pay My Lenders Back After A Short Sale?


Solving Your Mortgage Crisis Just Got Easier

Here’s a Video explaining California’s new law from “The Short Sale Genius!”



Forth Hoyt, Sacramento Certified Short Sale Specialist and Expert Short Sale Negotiator reports that California Law Now Stops Short Sale Recourse on second mortgages– Including All Claimants- Mortgage Insurance included!

Another Milestone in California Short Sale Deficiency Law


Let’s back up and give a little foundational info:

Civil Code Of Procedure 580(e), which originated as SB931, protects homeowners from any recourse or deficiency action from first mortgages in California.  It was a huge deal and I wrote about it here:

California’s New Short Sale Recourse Law and California Anti Deficiency Law History





You see,on January 1, 2011 A Short Sale Recourse Law In California went into effect.  SB 931 (2010)  was put into law and it became Civil Code of Procedure 580(e), requiring that any first lender that agrees to a short sale must accept the agreed upon short sale payment as payment in full of the outstanding balance.  But unfortunately, the rule did not apply to junior lien holders.

SB 458 Extends Anti-Recourse Protections of SB 931 to Second Mortgages! This new law now expands those SHORT SALE ANTI RECOURSE provisions to ALL JUNIOR LIEN-HOLDERS and prohibits a deficiency judgment coming from any junior lien holder, including all related claimants, investors or insurers!

A report from the State Capital put it this way: “This Newest  California  Short Sale Law eliminates Junior Lenders (2nds, HELOCs, etc) recourse  and stops deficiency recourse claims from a short sale (deficiency judgments) against the borrower if the lender agrees to a short sale. Gov. Jerry Brown signed SB 458 (Corbett) into law and it took effect immediately.”

From an email from California Association of Realtors on July 15: “Effective immediately for transactions closing escrow from this day forward, both senior and junior lien-holders 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.”

The bill would also  prohibit the holder of a note from requiring the trustor, mortgagor, or maker of
the note to pay any additional compensation, aside from the proceeds of the sale, in exchange for the written consent to the sale.

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Questions on your particular situation?

Contact us today at Forth Hoyt’s Sacramento Short Sale Center

Or find out here  about  New Government Foreclosure Prevention Program Eligibility- Which Programs Do You Qualify For?

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