In 2011, the California Legislature passed Senate Bill 931 (SB 931) to provide for "anti-deficiency" protection to certain short sales.
However what does this mean and what's a 'dificiency '?
Selling real estate thru a 'short sale ' used to end up in the lender seeking a "deficiency judgment".
This deficiency judgement is the greatest difference between the sales price set out in the short sale and the present loan balance.
With the passage of California Senate Bill 931, which was officially implemented Jan 1, 2011, a borrower that proceeds with a Roseville short sale is not monetarily responsible to the bank for the difference between the loan balance and the sales price received by the bank.
This implies that if a householder sells the property for $80,000, but essentially owes the lender $100,000, then the homeowner won't owe the lender the $20,000 difference.
The languauge of the bill states, this deficiency protection is afforded only to a loan secured as a primary first lien mortgage.
In addition, it applies only to a single family residence which is understood to be" a dwelling of less than 4 units."
Additionally, there are certain restrictions to this deficiency purchaser protection statute. The 1st limitation is that it does not apply to 2nd mortgages. Therefore, the holder of a note secured by a second trust deed would still keep the privilege to sue for the non-payment of the mortgage. Another limitation is that it applies only to human borrowers (not companies). Fascinating nonetheless , there is no requirement the human borrower be an owner occupant. Eventually, this statute does not apply if the borrower has been proved to commit mortgage fraud.
This California senate bill is a great solution for the thousands of house owners looking for a California Short sale. Previously, owners were encumbered with the prospects of being sued thru a short sale. Now, real estate inventory should be cleared faster, which will allow the bottom to squash out quicker and limit the way ahead for short sales in California.
However what does this mean and what's a 'dificiency '?
Selling real estate thru a 'short sale ' used to end up in the lender seeking a "deficiency judgment".
This deficiency judgement is the greatest difference between the sales price set out in the short sale and the present loan balance.
With the passage of California Senate Bill 931, which was officially implemented Jan 1, 2011, a borrower that proceeds with a Roseville short sale is not monetarily responsible to the bank for the difference between the loan balance and the sales price received by the bank.
This implies that if a householder sells the property for $80,000, but essentially owes the lender $100,000, then the homeowner won't owe the lender the $20,000 difference.
The languauge of the bill states, this deficiency protection is afforded only to a loan secured as a primary first lien mortgage.
In addition, it applies only to a single family residence which is understood to be" a dwelling of less than 4 units."
Additionally, there are certain restrictions to this deficiency purchaser protection statute. The 1st limitation is that it does not apply to 2nd mortgages. Therefore, the holder of a note secured by a second trust deed would still keep the privilege to sue for the non-payment of the mortgage. Another limitation is that it applies only to human borrowers (not companies). Fascinating nonetheless , there is no requirement the human borrower be an owner occupant. Eventually, this statute does not apply if the borrower has been proved to commit mortgage fraud.
This California senate bill is a great solution for the thousands of house owners looking for a California Short sale. Previously, owners were encumbered with the prospects of being sued thru a short sale. Now, real estate inventory should be cleared faster, which will allow the bottom to squash out quicker and limit the way ahead for short sales in California.
About the Author:
Real estate short sales are now a standard practice across the US, especially in California. Sharing short sale info with householders is a prized asset that this author deems very important. Discover more about this subject with: Tax Effects of a Short Sale and Credit Implications of a Short Sale.
No comments:
Post a Comment