What the heck is SB 931 and how does this impact your Elk Grove Short Sale?

This bill was signed by the Governor on September 30th and goes into effect for short sale transactions after January 1, 2011.

So how does this new bill impact homeowners who are struggling to make their payments?

One of the risks of going through a short sale, is the lender could go after the homeowner for their loss, after the short sale is approved and the home sold. This is called a deficiency judgement.

Wikipedia says it best...

A deficiency judgment is an unsecured money judgment against a borrower whose mortgage foreclosure sale did not produce sufficient funds to pay the underlying promissory note, or loan, in full.

The availability of a deficiency judgment depends on whether the lender has a recourse or nonrecourse loan, which is largely a matter of state law.

So now that brings us to the point of this blog -------> What does this new bill change?

Lenders can no longer go after the homeowner for their loss for a 1st deed of trust or 1st mortgage (if a dwelling was no more than 4 units)... regardless of whether the loan was recourse or non-resource!

Huh?.... The new law basically says if the lender agrees to a short sale for a 1st mortgage... They must consider the debt paid in full and can't go after the homeowner for the difference! This is a really big deal!

Keep in mind this new bill does not protect homeowners who decide to let their home go to foreclosure!

It's important to note that this new bill does not apply to 2nd mortgages. So the risk is still there if a 2nd mortgage is involved. 

So now you know that SB 931 impacts your Elk Grove Short Sale in a good way... It's just another reason to take a closer look at a short sale as an alternative to a foreclosure!

Contact us today so we can get started!... We are here to help!