California’s New Short Sale Recourse Law and California Anti Deficiency Law History
The Original Anti Recourse Laws For Mortgages Were Written During The Great Depression
The Original Anti Recourse Laws For First Mortgages Were Written During The Great Depression
Sacramento Short Sale Specialist, Expert Short Sale Negotiator and Multi-Certified Folsom Short Sale Agent Forth Hoyt reports:
The history of California Short Sale Recourse Law, California anti deficiency law and mortgage debt relief law in California. Starting January 1, 2011: No Recourse on Short Sales that have been approved by a first mortgage holder. PERIOD!
During the great depression, California had to deal with a huge percentage of homes going into foreclosure. Legislature in California was passed and laws were written to protect homeowners from recourse, after foreclosure. Back then, most mortgages were never refinanced (very short terms) and there weren’t many short sales. So the Civil Code of Procedure 580 (d) was written, and it only protected purchase money loans that went into foreclosure from recourse; if a loan had been refinance or was not purchase money or was given relief through a short sale- it was full recourse and the mortgage holder was on the hook for any deficiency…
So in the past, law California protected only residential borrowers against deficiency liability on their original loan for the purchase of a home, regardless of the method of foreclosure the lender uses, judicial or non-judicial. However, under current case law, this anti-deficiency protection is lost if the original loan is refinanced, so only covers (Purchase Money).
Read More on California Short Sale Anti Deficiency LawSB931
Questions on your particular situation? Is your second mortgage non-recourse too? Contact us Today At Forth Hoyt’s Sacramento Short Sale Center
A new Bill, SB931 (Senate Bill 931) and the subsequent Civil Code of Procedure 580 (e) will change the way banks are handling short sales and foreclosures in California. The new law that goes into effect on January 1, 2011 and put an end to deficiency judgments ALL first mortgages. No matter what. Regardless if it was refinanced or not. No matter if it is purchase money or not. No matter if cash was taken out or not. This newest California anti deficiency and anti recourse law prohibits a lender from being able to receive a judgment for deficiency (deficiency judgment) after a short sale on first mortgages or deeds of trust, as specified.
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?
Oh and by the way I am not an attorney. If you are in any type of situation where you may be underwater and need to sell, talk to me AND talk to an attorney!