California real estate agents are applauding a new law that prevents all lenders from pursuing homeowners who sell their properties via a process known as a short sale.
Gov. Jerry Brown today signed the law, Senate Bill 458, according to the North County Times of San Diego County.
The law broadens state protections for short sales, transactions where a home is sold for less than the amount owed on the mortgage.  DataQuick of San Diego reports that short sales made up 18 percent of the June home purchases in California.
Previous law required that first mortgage holders who agree to short sales must accept the agreed-upon proceeds as payment in full.
The new law extends the same rules to holders of second mortgages and other 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 Beth L. Peerce, president of the California Association of Realtors.
The new law, she said, “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.”
The new law contains an urgency clause, making it effective upon signing.
— Robert Digitale