The new law reportedly signed by Gov. Jerry Brown will prevent first and second lien-holders (financial institutions who hold the note of the house) from pursuing homeowners in California who have gone through a short sale. It is a well known fact that first and second lien holders had the right to pursue home owners for 12 months to as long as 6 years after the short sale; which always seem to vary as new laws are signed.
“The new law builds on the protections offered by a previous law, SB 931, which required the first lien holder in a short sale to accept an agreed-upon payment as the full payment for the outstanding loan balance. The previous law did not address junior lien holders.
The new law, which became effective immediately, now prohibits secondary lien holders from pursuing deficiencies after a short sale closes.”
(Note: I wrote a post about 2nd Lien Holders: I’ve got a bone to pick with you)
The California Association of Realtors embraced the signing of the law calling it a “victory for California homeowners.”
Californians, who many were forced to sell at a loss, will finally have final closure at the end of the process as the number one fear I hear from would-be short sellers is how the banks can go after them. This is good news and I hope financial instutions abide by it.
Comments on this entry are closed.