SB 458 Passes: NO Short Sale Deficiency Judgements on Second Trust Deeds (aka, Junior Liens) in California!

I have not noticed much media coverage for this, but on Friday, California Governor Jerry Brown on signed SB 458 (Corbett) into law. SB 458 extends the protections of SB 931 (passed and signed into law last year by Governor Schwarzenegger) to also include junior liens, aka 2nd mortgages. Both pieces of legislation state that a lender that agrees to a short sale must accept the agreed upon short sale payment as payment in full of the outstanding balance of all loans.

Prior to SB 931 and SB 458, only financing obtained at the time a home was purchased contained "anti-deficiency" protection -- meaning the mortgage lender could not pursue any action or have recourse to recoup their loss or "deficient" balance. Now these protections are extended to refinanced loans, and "junior" liens.

A short sale is a transaction in which the homeowner owes more on the loan than the property is worth. In order to sell the home, the mortgage holder(s) must approve the sale because the amount owed is "short" of what is currently owed by the seller.

SB 458 contains an urgency clause making it effective upon signing (July 15, 2011)...so it now it would seem that any California short sale seller who closes their transaction successfully would have protection from recourse afterwards...good news for distressed property sellers!

I do many short sales in Sacramento, often times for sellers with multiple loans on their homes. This, combined with the state and federal "phantom income" tax relief, will certainly create a much more favorable environment for short sale sellers who already have financial hardships to get their properties sold -- one less thing to worry about.

This legislation was championed by the California Association of Realtors -- of which I sit on its Board of Directors. I have blogged before that we advocate on behalf of property owners since there is no "California Association of Home Owners." I am very pleased to see that we were successful in our efforts to help California (and specifically Sacramento-area) sellers who need to sell but are upside-down in the value of their homes.

Sacramento Short Sale Resources & Tools

Over the last couple weeks I have been compiling a Sacramento Short Sale Directory of sorts from my experiences dealing with the different loan servicers, loan investors, and short sale programs...so, if you are looking for information dealing with Sacramento Short Sales, there is now a section on my website aptly named "Short Sale Tools." Check it out! I have tried to make sure all the short sale information is relevant and up-to-date...hopefully you find it to be of value. I have negotiated short sales with MANY entities, and I will continue to modify and add to this directory over time. Cheers!

I was Quoted in a Sacramento Bee Article about Short Sales

I spoke to Jim Wasserman of the Sacramento Bee briefly on Wednesday regarding the new Federal HAFA (Home Affordable Foreclosure Alternatives) Program that takes affect on Monday, April 5th. He used a few of my quotes for an article that appeared in today's SacBee about Short Sales.

The premise of the HAFA Program is good idea and all (to streamline the short sale process and provide financial incentives to lenders and sellers/borrowers for doing short sales)...and like the HAMP Program for loan modifications, I think that the implementation by the loan servicer participants, and overall effectiveness of HAFA will be slow and probably a bit clumbsy to gain any real momentum. I do not think the financial incentives offered to these servicers will be any major carrot for compliance with the program...

Apparently, all the of the loan servicers that are (voluntarily) participating in HAMP will be required to (voluntarily) participate in HAFA as well. There are many loan servicers that are working with the HAMP Program already - many of the major ones include Aurora Loan Services, American Home Mortgage Servicing, Bank of America (formerly Countrywide), JP Morgan Chase, CitiMortgage, GMAC, HomEq, Litton Loan Servicing, National City Bank (aka, PNC), OneWest Bank (formerly Indymac), US Bank, Wachovia, and Wells Fargo...there are several other small banks and credit unions on board.

I have spoken to many of the loss mitigation reps at all of the loan servicers I am doing short sales with (literally, reps from that entire list above), and most have never even heard of HAFA. Wells Fargo's loss mitigation department seems to aware of HAFA though, and seems to be restructuring itself a bit to get ready...but again, I think the roll-out will take a long while....and as I am quoted in the SacBee article, Wachovia has the smoothest short sale process out there already. Time will tell!

Wachovia Short Sale - What Sacramento Buyers or Sellers can expect...

So I have gotten to the point where I have closed so many Sacramento short sales, I figured I would share my experiences with different lenders. The last short sale lender profile I did was for Bank of America. I figured this time I would profile a lender at the opposite end of the spectrum: Wachovia.

Let me just tell you - if you are a Sacramento buyer or seller dealing with Wachovia Bank on a short sale, you have stumbled upon the golden goose!

Wachovia has one of the smoothest short sale approval processes I have witnessed. They actually have a local representative that personally meets with the short sale seller and the listing agent, who personally views the property, and issues short sale approval in a short time - usually within 3-5 days. Wachovia commonly offers the sellers incentives to move out and leave the property in good condition. Ocasionally a Wachovia short sale can be "conditionally" approved before it is listed in MLS. The seller generally does not have to supply much financial documentation - rather the seller must be prepared to discuss their financial / hardship situation with the local rep during their in-person meeting.

I would post the local Wachovia short sale rep's name, telephone number, and email address, however since I have her direct contact information, I am going to refrain from posting it so that she does not receive an onslaught of communication.

Click here if you are thinking about doing a short sale of your home. Click here if you are thinking about buying a short sale home.