On June 15, 2011 Gov. Jerry Brown signed into law SB 438 which would now make it illegal for a lender with a deed of trust on real property to require the borrower (seller) to bring in money to the transaction in order for them to approve a short sale. This is a follow-up to the bill SB 931 that went into affect Jan 1, 2011 which required a lender to grant full debt forgiveness if they approved a short sale on a first or senior deed of trust. This law did not require any junior lien holders to grant the same forgiveness or prevent them from requiring the borrower to sign a promissory note for a portion of the unpaid balance or require the borrower to make a cash contribution to close the escrow, hence SB 438. This bill prohibits and senior or junior (1st, 2nd, 3rd, equity line, etc) from requiring a borrower (seller) or the buyer in a short sale transaction to sign a promissory note of bring in cash to the transaction in order for the lien holder to approve a short sale. Please see below for a general over view of the new law. It still remains to be seen how this will affect the willingness of these lien holders to approve a short sale or how it will change the lending market when it comes to equity lines of credit, 2nd, 3rd mortgages and the like. My experience has always been that whenever there is an action, there is an equal reaction and we will have to wait to see how this will affect those that have the ability to acquire those types of loans and if they will still be available. As always i welcome any comments or questions that you may have regarding this or any other real estate matters.
July 15, 2011
CALIFORNIA ASSOCIATION OF REALTORS® applauds Gov. Brown on signing SB 458 into law
LOS ANGELES (July 15) – The CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) applauds Gov. Jerry Brown on signing SB 458 (Corbett) into law. SB 458 extends the protections of SB 931 (2010), to ensure that any 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.
Under previous law (SB 931 of 2010), a first mortgage holder could accept an agreed-upon short sale payment as full payment for the outstanding balance of the loan, but unfortunately, the rule did not apply to junior lien holders. SB 458 extends the protections of SB 931 to junior liens.
“The signing of this bill is a victory for California homeowners who have been forced to short sell their home only to find that the lender will pursue them after the short sale closes, and demand an additional payment to subsidize the difference,” said C.A.R. President Beth L. Peerce. “SB 458 brings closure and certainty to the short sale process and ensures that once a lender has agreed to accept a short sale payment on a property, all lienholders – those in first position and in junior positions – will consider the outstanding balance as paid in full and the homeowner will not be held responsible for any additional payments on the property.”
SB 458 contains an urgency clause making it effective upon signing.
Leading the way…® in California real estate for more than 100 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States, with nearly 160,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles
Well the local market is still showing signs of life. Sales continue to be steady and the median sales price is up about 3.4% year over year. One of the big plus' is that notices of default are down significantly over the last year and we are on track to have the lowest numer for the year since 2006. Mortgage rates have moved up slightly over the last week or so but are still near historic lows and there is still plenty of money to be lowned out. When you take into cosideration the low cost of houses and the low mortgage rates that are currently available, it is a fantastic time to be a home buyer in todays market and in most cases here locally, your mortgate payment will be lower that your rent payment. All in all it is not the end of the world and the real estate market is a great place to look for long term bargins and investments. Dispite what some doom and gloomers might say when it comes to owning real estate, the population of this country has increases by approximately 28,000,000 people over the last ten years and is projected to top 330,000,000 by 2020 and all of those people are going to need a place to live. At the current new construction rate we will have a housing shortage by 2015 and that will have a positive effect on the appriciation of real estate nationwide. If you have any questions reagrding real estate or the real estate market, please feel free to contact me at 661-303-0776 or marvin@marvinlbush.com.