Ethical Foreclosure

Governor Schwarzenegger signed a VERY important bill into law that protects California homeowners who sell their homes for less than they owe but vetoed a more sweeping bill providing protection following a refinance. SB 931 (Ducheny) has become law. Previously, mortgage holders who accepted "short sales" of real property and received less than the full amount of debt owing could pursue their borrowers for the deficiency. While many lenders routinely granted waivers of the deficiency^* left after a short sale such willingness was by no means uniform. The issue is resolved by new California Code of Civil Procedure section 580e:^** if the mortgage holder consents in writing to a short sale it is required to accept the sale proceeds as full payment and to discharge any remaining claims against the borrower.

WHAT DOES THIS MEAN to you as a Home Owner that is struggling to make your home payments:
  • IF WE or anyone else does a short sale to help save your credit, any left over amount from your 1st mortgage as a result of the short sale will keep YOU from being attacked or harassed by your 1st mortgage lender after the conclusion of the short sale.
  • IF you had a 2nd mortgage, 3rd mortgage, HeLoc, Mechanics Lien or any other lien, and they take a discount, those companies MAY still come after the home owner for any left over funds not received (deficiency) in the short sale

IF this scares you, it should, because you have NOT YET found the right company to help you get ALL the information you need to help you in an ethical, above the board, legal way to work with you through your short sale.
WE can honestly state that ALL of our past clients HAVE NOT been sued or approached for more money, from ANY previous liens,

READ More on ActiveRain

*What is a Deficiency Judgment?
Awarded thru the court system, a judgment that demands payment of money not paid per an agreement. Lenders can seek a deficiency judgment if a discount is taken, or if they lose money after a foreclosure sale.

**Information on the Law in summary
The LEGISLATIVE COUNSEL'S DIGEST for the new law reads as follows:

Existing law authorizes an action for a deficiency judgment for the balance due upon an obligation for the payment of which a deed of trust or mortgage with power of sale upon real property or any interest therein was given as security, as specified. Existing law prohibits a deficiency judgment in any case in which the real property or an estate for years therein has been sold by the mortgagee or trustee under power of sale contained in the mortgage or deed of trust.

This bill would prohibit a deficiency judgment under a note secured by a first deed of trust or first mortgage for a dwelling of not more than 4 units in any case in which the trustor or mortgagor sells the dwelling for less than the remaining amount of the indebtedness due at the time of sale with the written consent of the holder of the first deed of trust or first mortgage. The bill would provide that written consent of the holder of the first deed of trust or first mortgage to that sale shall obligate that holder to accept the sale proceeds as full payment and to fully discharge the remaining amount of the indebtedness on the first deed of trust or first mortgage. The bill would specify that those provisions would not limit the ability of the holder of the first deed of trust or first mortgage to seek damages and use existing rights and remedies against the trustor or mortgagor or any 3rd party for fraud or waste if the trustor or mortgagor commits either fraud with respect to the sale of, or waste with respect to, the real property that secures that deed of trust or mortgage. The bill would make these provisions inapplicable if the trustor or mortgagor is a corporation or political subdivision of the state.

The new section 580e would read as follows :
580e.
(a) No judgment shall be rendered for any deficiency under a note secured by a first deed of trust or first mortgage for a dwelling of not more than four units, in any case in which the trustor or mortgagor sells the dwelling for less than the remaining amount of the indebtedness due at the time of sale with the written consent of the holder of the first deed of trust or first mortgage. Written consent of the holder of the first deed of trust or first mortgage to that sale shall obligate that holder to accept the sale proceeds as full payment and to fully discharge the remaining amount of the indebtedness on the first deed of trust or first mortgage.

(b) If the trustor or mortgagor commits either fraud with respect to the sale of, or waste with respect to, the real property that secures the first deed of trust or first mortgage, this section shall not limit the ability of the holder of the first deed of trust or first mortgage to seek damages and use existing rights and remedies against the trustor or mortgagor or any third party for fraud or waste.

(c) This section shall not apply if the trustor or mortgagor is a corporation or political subdivision of the state.