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A new law in California now prevent banks for going after people who short sell their homes in the state for the difference between the loan amount and the sales amount. We get this from a recent HousingWire piece:

California Gov. Arnold Schwarzenegger signed a state bill into law Oct. 1 prohibiting mortgage holders from pursuing deficiencies after a short sale is accepted.

Before S.B. 931 was signed, distressed borrowers who sold their homes for less than the owed amount were still in danger of owing the debt left over, or the deficiency. Many lenders routinely granted deficiency waivers, but now it is required by law.

California pre-foreclosure sales, often short sales, increased 8% in the second quarter, according to RealtyTrac, which tracks the data.

With any luck more states will follow suit. Selling short is a useful compromise that allows banks to get the fair value of the home while helping consumers avoid a foreclosure on their credit report.

Comments (0) Posted by G.R.A. Admin on Wednesday, October 6th, 2010


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