New Laws Concerning Short Sales
The California government has recently passed SB 458, which states that if a lender agrees to a short sale, which means the amount the home sells for will be insufficient to cover the amount of the loan, then the bank(s) must accept it as payment in full. There are no deficiency judgements in California.
Previously a first mortgage holder accepted an agreed-upon short
sale payment as full payment for the first mortgage but a junior lien
holder could still pursue the seller for the full amount owned on the
junior lien (deficiency judgement).
This is good news for California homeowners in distress sale situations. In Maryland, this is not the law. In most cases, banks do not pursue the deficiency because the cost of doing so doesn't make it worthwhile. Although it is the practice, it isn't the law.
We hope that Maryland legislators will follow what is usually the case in real estate - it happens in California first, then makes it's way to the east coast.
previously a first mortgage holder could accept an agreed-upon short
sale payment as full payment for the first mortgage but a junior lien
holder could still hound the seller for the full amount owned on the
junior lien.
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