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Home Risk-Free Short Sale?

Risk-Free Short Sale?

Short Sale Home For Sale

Friday 7/15/11, a law signed by Gov. Jerry Brown came into effect prohibiting a deficiency judgment following a short sale on a one to four unit property. This Senate Bill 458 is a step in the right direction for clearing the backlog of underwater mortgages and helping distressed homeowners who have been hesitant about short selling their homes.

Until now, the exception to the deficiency judgment applied only to purchase-money loans, leaving distressed sellers open to possible suit for amounts owed on second mortgages and other junior liens.

How much will it impact the real estate industry? It may get some homeowners off the fense and into a position where they can consider a short sale, instead of waiting for an inevitable foreclosure. Foreclosures are more dramatic at every level and this chart dramatizes the pros & cons of short-sales vs foreclosures.

Does it mean smooth sailing for distressed homeowners? Not entirely. No one enters a short sale lightly. Homeowners have been already in a precarious situation for quite a few months trying all possible avenues (modification loans, bank negotiations...) before concluding that a short sale is the only way to avoid foreclosure. By taking a few major hurdles out of this way for some, it will benefit everyone in the long run, helping to promote short sales and limiting the effect of foreclosures. This law takes effect immediately.

Here in Topanga, the percentage of short sales and foreclosures is close to 40% with a hefty amount of distressed properties located in “Top of Topanga”, Viewridge or Summit Pointe Estates and, increasingly it seems, in the rest of Topanga as well.

Posted Monday Jul 18