The California Senate has passed SB 931 unopposed and the Assembly already passed it. SB 931 could clear the path for more streamlined short sale processes. The bill would prohibit banks from pursuing deficiency judgements against sellers on 1st liens in the state of California.
In California, once a seller has refinanced their mortgage, whether it is a cash out refinance or simply a refinance to a better interest rate, the loan becomes a “recourse loan”, meaning the bank can pursue the seller after the short sale for the deficiency, unless it is specifically stated in writing that the debt/note is fully settled with no recourse on the short sale approval letter.
SB 931 prevents banks from pursuing sellers for deficiency judgments on first mortgages in CA.
The bill is on Governor Schwarzenegger’s desk for signature. This could be a great relief for many Californians who are pursuing short sales.
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