From March to July 2011, Senator Ellen Corbett was amending SB 458, which aimed to support and expand current laws SB 931 and SB 580e. Then in July 2011, SB 458 was approved and signed into law by Governor Jerry Brown, effective immediately. The new law states that after a short sale closing, (both) lien holders now will consider the outstanding balances paid in full and not seek monetary damages for their losses. In other words, Mr. and Mrs. homeowner no longer have to worry about the equity line and can walk away with only a short sale on their credit report.
Seems to be good news huh? Possibly for the home owners who short sell with Wachovia, Chase and Citibank, as those lenders have all been seller friendly and have been very good to work with from an agents perspective. So, for the millions of home owners who will be forced to work with other lenders, I am sorry to report that a short sale is a voluntary act for the banks and they do NOT have to approve anything. I am pretty sure they have attorney's working on a solution or work around for SB 458 because banks are in the business of making money, so if they are hand cuffed and can no longer seek monetary damages from us, they will find an alternative route.
Bottom line, my non-legal and semi-professional advice is to always hire an agent who is well experienced in short sale negotiations. To have an attorney look at the short sale approval to make sure there is no special language in there that we common folk overlook. Most importantly, consult with your tax representative or tax attorney for a complete big picture scenario.
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