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Conrad Hodgson's Blog

By Conrad Hodgson | Broker in Encinitas, CA

New Deficiency Protection for California Short Sales; SB 931 Protects All First Mortgages

San Diego Short Sale Certified Specialist and CDPE Certified Short Sale Specialist Provides San Diego short sale help reports:

When Governor Schwarzenegger signed SB 931, California became SHORT SALE HEAVEN!

Short Sale Deficiency in California may be a thing of the past!

California’s newest homeowner protection bill SB 931 stops Deficiency Judgments on short sales in California on ALL FIRST MORTGAGES no matter how or when they were originated!

Just like the Great Depression, The Great Recession is forcing lawmakers to pass protective laws that protect homeowners.  In California during the Great Depression, thousands were losing homes to foreclosure and lawmakers in Sacramento stepped up to provide greater protection from lenders.  So today, just like then, lawmakers are scrambling to come up with laws to protect homeowners from banks, after foreclosure.

California Legislature passed a series of homeowner protection bills in the 1930s that gave banks every right to foreclose on people who didn’t make their payments, but that power ended at foreclosure. They could take back the house, but they couldn’t contact people after the foreclosure and try to collect more unpaid debt.

But during the 30’s, Sacramento lawmakers left open an important loophole in the law, which has pushed the issue back onto lawmakers agenda 80 years later. The 1930s laws protect only people with purchase money loans. What about the millions of homeowners who refinanced their purchase money loans, especially when mortgage rates fell into a low 5 percent range?

SB 931 will protect from deficiency because SB 931 will exempt all first mortgages from deficiency, hard-money, refinanced or purchase money, from a deficiency after a short sale as well. It prohibits deficiency judgments on a property secured by a first trust deed for a dwelling of 1 to 4 units. Every potential short sale seller with a refinanced first mortgage should be screaming for joy right now.

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