Team Pochay Realty

California Governor Signs SB 458 – No Deficiency After Short Sale for Junior Liens

Back in 2010, SB 931 Law was signed, which stated that after a short sale transaction is completed in California, lenders/banks cannot pursue the homeowner/seller for the remaining balance of the loan (amount owed minus the sale price). But unfortunately, this rule did not apply to junior lien holders (second/third mortgage or home equity line of credit/HELOC).

However, Governor Brown signed SB 458 in June 2011, which is the law that extends the protection of SB 931, ensuring that any lender that agrees to a short sale transaction for a residential property from 1 to 4 units, must agree to the short sale payment as payment in full for the outstanding balance of all loans (first/second/third mortgage liens, HELOC, etc.)

For sellers who conduct a short sale after July 2011, SB 458 means that a short sale junior lien holder cannot require additional compensation (cash contribution, promissory note, etc.) as part of the short sale approval. If needed, the agent still can contribute to make transaction go through.    

But SB 458 ensures that after close of escrow in a short sale, there is no possibility that the lender can pursue the borrower/seller. Therefore, the lien and (personal) liability will be released by all lenders involved in a short sale.

For more info, visit:  http://www.shortsaleyourhome.blogspot.com/

Mortgage Assistance Relief Services Disclosure (MARS)

Many homeowners who are facing foreclosures are willing to listen to any company that will say, “We can help you stop foreclosure, modify your home and/or conduct the short sale.” However, beware of the many schemes where some individuals and companies are taking advantage of distressed homeowners and are not performing the acts that they promised.

Recently, the Federal Trade Commission (FTC) issued a Rule to fix the unfair and deceptive practices associated with mortgage assistance relief services – Mortgage Assistance Relief Services (MARS) rule. Here some points from this rule:

1. It's illegal to charge upfront fees. The service must be performed first and the homeowner must agree to the offer from the bank.

2. Clear and prominent disclosure of information. Before signing people up for services it is mandatory to provide clear and noticeable disclosure of information (i.e., total cost, stopping of services at any time, or that the company is associated with the government, etc.).

For more info, visit: http://www.shortsaleyourhome.blogspot.com/

Short Sales and Debt Forgiveness Act

At the end of 2010, homeowners who completed a Short Sale, Foreclosure or Loan Modification were wondering what to expect in regards to the tax returns.  Here are a few things to know. The difference between the loan amount and the sale price will be considered as the income to the homeowners that were involved in Short Sale, Foreclosure or Loan Modification Process.

For example, if you borrowed $400,000 and your property is sold for $320,000, there will be a cancellation debt of $80,000. At the end of the year, the lender will have to send the Form 1099-C (Cancellation of Debt) to the borrower, showing the amount of debt canceled if the forgiven amount is $600 or more. The good news is that you may be able to exclude part or all of this income if:

1. The debt was qualified principal residence indebtedness;

2. You were insolvent immediately before the discharge;

3. The debt was canceled in a Title 11 bankruptcy case;

4. You have non-recourse loans.

For more info, visit:  http://www.shortsaleyourhome.blogspot.com/