Industry NewsMortgage

Calif. short-sellers avoid deficiency judgments

Governor rejects related bill for homeowners who refinance
Published on Oct 7, 2010

California Gov. Arnold Schwarzenegger has signed into law a bill that protects homeowners who get their lender's approval for a short sale from deficiency judgments, but vetoed related legislation that would have extended similar protections to homeowners who have refinanced their mortgage.SB 931 was supported by the California Association of Realtors, although the group said the bill did not go far enough because it does not protect homeowners engaging in short sales from attempts by junior lien holders -- owners of notes associated with so-called "piggyback loans" -- from seeking a deficiency judgment.Depending on laws that vary from state to state, lenders may file for deficiency judgments when the proceeds from a short sale or foreclosure sale don't cover the entire amount they are owed.California generally prohibits lenders who foreclose on homeowners who default on a purchase mortgage from pursuing deficiency judgments. But homeowners who have refinanced their homes or ...

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