One of our Bay Area Resource real estate attorneys just sent us info about a new case that should be great news for distressed homeowners.
The case called B of A v Mitchell confirmed that if the issuer of the first and the second loan represented the same entity, a foreclosure of the first will not allow the second to go after the borrower for a deficiency judgment. This case should be extremely helpful to homeowners who do not have purchase money mortgages, since before this ruling, many people believed that if the holder of the first and the second were the same, all the holder had to do was sell the second and the above rule would not apply. This case should put that theory to bed.
B of A v Mitchell – Easier Short Sales
This ruling could make it easier for borrowers to engage in a short sale because now the recalcitrant holder of the second (if they are assignees of the issuer of the first loan) will have basically zero leverage over the borrower, and way more likely to agree to any money on the second that’s being offered.