CAR and several Short Sale agents are excited that the Governor signed SB 458 on Tuesday, extending anti-deficiency protection to homeowners with Second Mortgages under CCP 580e (added by SB 931 last year). This may be a case of “be careful what you ask for,” in that there is no incentive … and certainly some disincentives … for Lenders holding 2nd mortgages to cooperate in a Short Sale. Lenders are expressly prohibited from asking for a contribution from the borrower. And, SB 458 provides no protection for investors who own property in a corporation, LLC, or limited partnership. In some cases, foreclosure may prove to be a better alternative than a short sale for some Lenders.
Real Time Resolutions, 2nd TD, have taken a stance that since they can’t go after a deficiency, they are going to be harder on an approval. I was told they would just write it off of their taxes.
Well there’s no need for the bankers or the mortgage companies to complain all they had to do is show their investors how much more money they could have made had they agreed to rewrite/recast loans and everybody would be happy! Ooops I forgot there’s the greed factor!