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Serving the Santa Maria Valley and surrounding Central Coast areas
Santa Maria, Orcutt, Nipomo, Lompoc & Arroyo Grande
Published on July 22nd, 2011D'Ann Bartley
Short sales have been a hot topic for several years now, but for those who may not be familiar with what a short sale is, here is a very simple definition. A short sale occurs when the current fair market value sale price is less than the balance owing on existing loan(s). It requires approval by the lender, and if there is more than one loan, each lender must approve, even if there is little or no payment received, for the short sale to succeed. It is a very time-consuming process, often taking months.
One of the major drawbacks is that although a homeowner may sell the home, one or more of the lienholders could still pursue the homeowner for the deficiency. California is a “non-recourse” state, meaning if the senior loan was a purchase money loan (not a re-fi), then there was no recourse for the lender once the short sale concluded. However, junior lienholders did not have the same rules, and could pursue the homeowner for the deficiency.
California Senate Bill 458 has significantly changed that for all homeowners facing short sales. On July 15, Governor Jerry Brown signed this bill, and it became law immediately. Junior lienholders may no longer go after homeowners for the deficiency, once the lien has been released for the purpose of the sale. Senate Bill 458 Signed