.jpg)
short sale/junior trust deed deficiency
charsetndows-1252
Thanks, Jim, that's just what was buzzing around in my head.
However, it may have the presumably unintended consequence of discouraging junior lenders from consenting to a short sale; then pursuing their rights as a sold out junior to the whole amount of the loan.
Jason Wallach
Gladstone Michel Weisberg Willner & Sloane, ALC
4551 Glencoe Avenue, Suite 300
Marina del Rey CA 90292
(310) 821-9000
www.gladstonemichel.com
jwallach@gladstonemichel.com
On Mar 13, 2013, at 6:02 PM, Jim Selth wrote:
Jason:
See Code of Civil Procedure Section 580e. Subsection (b) provides:
A holder of a note shall not require the trustor, mortgagor, or maker of the note to pay any additional compensation, aside from the proceeds of the sale, in exchange for the written consent to the sale.
And no, it does not prevent a sold-out junior lienholder from filing suit after a foreclosure sale by the senior lender.
This new law was passed in 2010 first applicable only to senior lienholders, and was then amended in July 2011 to apply to all lienholders on residential property 1-4 units. Note, it does not have to be the borrowers residence. Because of this law, it is now very advantageous for a borrower to try the short sale approach, since if the junior lienholder agrees to the short sale, it is barred from filing suit on the deficiency. No wonder that it was the realtor lobbyists that rammed this through, right over the bodies of the banking lobby.
I also believe it is a shoddily drafted law, especially section (b) cited above. The lender can always say, No, I will not release my lien for $XX me an additional $10,000. However if the borrower offers to pay additional compensation outside of the sale proceeds, is that the lender requiring it? What if the extra money comes from the buyer, or the realtor?
Jim
James R. Selth
Certified Bankruptcy Specialist*
Weintraub & Selth, APC
11766 Wilshire Boulevard, Suite 1170
Los Angeles, California 90025
Telephone: (310) 207-1494
Facsimile: (310) 442-0660
E-Mail: jim@wsrlaw.net
*Certified by State Bar of California as Certified Legal Specialist in Bankruptcy Law
NOTICE TO RECIPIENT: THIS E-MAIL IS MEANT FOR ONLY THE INTENDED RECIPIENT OF THE TRANSMISSION AND THIS COMMUNICATION IS INTENDED TO BE PRIVILEGED BY LAW. IF YOU RECEIVED THIS E-MAIL IN ERROR, ANY REVIEW, USE, DISSEMINATION, DISTRIBUTION, OR COPYING OF THIS E-MAIL IS STRICTLY PROHIBITED. PLEASE NOTIFY US IMMEDIATELY OF THE ERROR BY RETURN-E-MAIL AND PLEASE DELETE THIS MESSAGE FROM YOUR SYSTEM. THANK YOU IN ADVANCE FOR YOUR COOPERATION
The post was migrated from Yahoo.
Jason:
See Code of Civil Procedure Section 580e. Subsection (b) provides:
A holder of a note shall not require the trustor, mortgagor, or maker of the note to pay any additional compensation, aside from the proceeds of the sale, in exchange for the written consent to the sale.
And no, it does not prevent a sold-out junior lienholder from filing suit after a foreclosure sale by the senior lender.
This new law was passed in 2010 first applicable only to senior lienholders, and was then amended in July 2011 to apply to all lienholders on residential property 1-4 units. Note, it does not have to be the borrower's residence. Because of this law, it is now very advantageous for a borrower to try the short sale approach, since if the junior lienholder agrees to the short sale, it is barred from filing suit on the deficiency. No wonder that it was the realtor lobbyists that rammed this through, right over the bodies of the banking lobby.
I also believe it is a shoddily drafted law, especially section (b) cited above. The lender can always say, "No, I will not release my lien for $XX". And this law would seem to prevent him from saying, "unless you pay me an additional $10,000". However if the borrower offers to pay additional compensation outside of the sale proceeds, is that the lender "requiring" it? What if the extra money comes from the buyer, or the realtor?
Jim
James R. Selth
Certified Bankruptcy Specialist*
Weintraub & Selth, APC
11766 Wilshire Boulevard, Suite 1170
Los Angeles, California 90025
Telephone: (310) 207-1494
Facsimile: (310) 442-0660
E-Mail: jim@wsrlaw.net
*Certified by State Bar of California as Certified Legal Specialist in Bankruptcy Law
NOTICE TO RECIPIENT: THIS E-MAIL IS MEANT FOR ONLY THE INTENDED RECIPIENT OF THE TRANSMISSION AND THIS COMMUNICATION IS INTENDED TO BE PRIVILEGED BY LAW. IF YOU RECEIVED THIS E-MAIL IN ERROR, ANY REVIEW, USE, DISSEMINATION, DISTRIBUTION, OR COPYING OF THIS E-MAIL IS STRICTLY PROHIBITED. PLEASE NOTIFY US IMMEDIATELY OF THE ERROR BY RETURN-E-MAIL AND PLEASE DELETE THIS MESSAGE FROM YOUR SYSTEM. THANK YOU IN ADVANCE FOR YOUR COOPERATION
The post was migrated from Yahoo.
Is there some California or federal law provision that prohibits a lender (senior or junior) from requiring a personal promissory note from the seller, as a condition of lender's consent to a short sale?
If so, does that prohibition have any effect on a "sold out junior" lender, trying to collect the full balance of the note in a lawsuit subsequent the senior lender's completed foreclosure sale?
Jason Wallach
jwallach@gladstonemichel.com
The post was migrated from Yahoo.