SB-931, Anti-deficiency Law in CA Protecting Homeowners Considering a Short Sale
Anti-deficiency law in CA, SB 931, applies to short sales that close escrow after 1/1/11, and protects homeowners from the deficiency judgments when short sales are approved. Lenders must accept the short payoff as full satisfaction of the debt.
Online, May 9, 2011 (Newswire.com) - Anti-deficiency law in CA, SB 931, applies to short sales that close escrow after January 1, 2011. This law protects homeowners from the deficiency judgments when short sales are approved by lenders. Lenders must accept the approved short payoff as full satisfaction of the mortgage debt.
This is a reassurance for CA homeowners who are under water, upside down in mortgage payments and, want to sell their house in a short sale. Homeowners can now rest assured that lenders cannot go after them for the remaining balance or deficiency judgment as per SB 931, and would accept short payoff as full satisfaction of the mortgage debt.
This law applies to investment properties and owner-occupied properties, as long as property is 1 to 4-family. This law does not apply to commercial properties. Also, this law is valid for all types of first position liens and mortgages even if these are refinanced loans, as long as property is 1 to 4-family. In case of 2nd and 3rd position liens and mortgages, this law does not affect or apply.
This law has proved to be of great encouragement and help for homeowners who want to stop foreclosure and are considering doing a short sale.