The new year will not doubt bring pops of champagne corks and many hangovers but on the distressed property front 2011 will also bring SB 931 into effect. But will the new anti deficiency law bring about a wave of change and protection for distressed homeowners?
We no doubt feel that when California state lawmakers enacted the state law that prohibits banks from pursuing deficiency judgments against sellers on 1st liens in California, regardless of whether the seller has refinanced or pulled cash out that they had good intentions in mind. Many shouted “Hooray” when this billed passed earlier this year but maybe the new law should have been greeted with polite applause as the bill does not cover 2nd liens or 3rd or 4th, etc.
The thing that really gets us has nothing to do with the new law itself. Any real estate agent worth their salt (or commission) who has been handling short sales up to this point should be negotiating to have the deficiency verbiage removed from any short sales so that the sellers won’t be on the hook for possibly deficiency judgment. This law won’t change much for the proactive agent who has the knowledge and skill to work a short sale deal that relieves the sellers of not just the burden of the first lien holder chasing after them but the second as well.
When an agent relies on the government for something that they should be doing anyway, it only brings to question what other things they aren’t doing for their client.