California's New Short Sale Law
Under a new California law, any lender that accepts a short sale (defined as yielding insufficient funds to take care of the loans outstanding on a propert) must accept the short sale proceeds as total payment for every loan balance on that property, which is a great day for homeowners who are upside down and needing to get the property sold, states the California Association of REALTORS®. (CAR)
In a previously prepared statement praising Gov. Jerry Brown for taking pen to SB 458 bill by signing it into California law, (CAR) representatives stated that in the past the holder of a first mortgage could receive an agreed-to short sale payoff as full payment on the first loan although a secondary lien holder might still go after the home seller for the total amount due on a second lien.
The signing of SB 458 is a win for homeowners in California who have been compelled to sell their home through a short sale process only to discover that the lender is coming after them for more money subsequent to a short sale being closed, by demanding additional funds to offset the difference.
This bill brings about closure and definiteness to the short sale procedure and make certain that after a lender is in agreement to take a short sale payoff for the property, every lien holder including those with loans in first and junior positions must consider the outstanding loan balances as being paid in full while homeowners will no longer be held accountable for additional loan payments for the property,.
Homebuyers seeking a property in the $500,000 plus price category should not wait. As they will probably be facing higher rates of interest combined with stricter underwriting rules and will be required to come up with increased down payments later in the year as conforming loan limits go up
Want-a-be buyers sitting on the fence should act prior Sept. 30, as conforming loan limits are set to be decreased, to avoid higher expenses of homeownership
Decreasing the mortgages limits eligible to be purchased by Fannie and Freddie could leave a wide ranging impact than on the market than on individual home purchasers, While the housing market attempts to find a more solid base, the price decrease for conforming loan limits scheduled for later on in the year could adversely impact the market.