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As most of you know Gov. Brown signed a bill making it impossible for second lien holders to file a deficiency judgment against a borrower who short sales their home. I asked an attorney if this includes seconds in collection. He replied, it doesn't matter who holds or is servicing the loan they can not pursue a deficiency judgment.
The law also states the second lien holder can not ask the borrower to contribute money as a condition of the short sale approval. It does however allow the borrower to offer a settlement. If you are doing a short sale and the second denies the short sale approval you or your seller will have to initiate a settlement with the second. Unless the buyer or agent(s) are willing to contribute which is allowed.
Since the beginning I have always tried to get all of my clients into the HAFA program. It takes a little longer but the second lien holder (if they are participating in the HAFA program) already releases any future liability as a condition of the HAFA program.
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