Love's Real Stories

Two big pieces of good news just rolled in from the world of short sales, and we’re rolling it out for you here. One:

If you caught this column a few weeks back, you may remember Ron Balkman featured therein, who described himself as “a hounded, hunted man,” and dubbed himself “The Fugitive.” He was the seller of a short sale being chased by collection agencies for the debt on a second mortgage. “I thought that when the bank approved my short sale, I was in the clear,” he said, “but after it closed they sent a pack of hyenas after me for the money.” At the time of his sale, the law allowed banks with a Second Loan to pursue sellers for the unpaid amount, though it was illegal for banks with a First Loan to do that.

The good news is the law changed as of last Friday, July 15th. It is now against the law for Second Loan holders to chase sellers for any money after allowing a short sale.

Here’s the newsline from the California Association of Realtors (CAR):

“CAR applauds Gov. Brown on signing SB 458 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.

‘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 contained an urgency clause making it effective upon signing.

Two:

Last December, C.A.R. leadership met with representatives of Bank of America and asked the lender to accept backup offers without starting the process over again.  C.A.R. also has raised this issue with Fannie Mae, Freddie Mac, and Wells Fargo, and hopes they will follow Bank of America’s lead with this process.

Over the past several months, I’ve been keeping you abreast of our progress in addressing your concerns about short sales.  I’m happy to tell you of another significant achievement.  Just last week, Bank of America announced it will accept backup offers on short sales and will allow the back-up offer to take over if the first buyer does not complete the transaction, without requiring the process to start again.  Under this new guidance, agents will no longer have to initiate a new short sale in Equator if the original buyer walks away from the transaction.  Instead, the agent can continue with the original transaction in Equator and work with the same short-sale specialist.