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Be very careful who you trust to short sale your property.  Many agents in San Diego are leaving their clients with the potential of future litigation by not negotiating the proper short sale approval.  IT IS NOT EASY!  To do the former takes time and negotiation skills most agents do not have!  Read below!

On purchase money debt the trustee's sale satisfies all indebtedness(read below)
Homeowners ordinarily cannot be liable for a deficiency judgment, due to two statutes: Code of Civil Procedure 580b and Code of Civil Procedure 580d. CCP 580b provides that no deficiency judgments can be obtained after foreclosure sales on purchase money loans secured against residential property with one to four units. CCP 580d provides that no deficiency judgment can be obtained in any non-judicial foreclosure. Taken together, these two statutes make deficiency judgments unobtainable in virtually all foreclosures against homeowners.

But neither of these statutes applies to a short sale situation. CCP 580b does not apply, because there is no foreclosure sale of any kind. CCP 580d does not apply, because there is no non-judicial foreclosure.

In short, if the lender agrees to permit a sale of the property for less than the amount of the debt, there is nothing in California statutory law which prohibits the lender from turning around and suing the borrower for the rest of the money owing under the mortgage. Thus, in order to protect the borrower, there should be verbiage in the short sale agreement expressly stating that the lender will take the money from the sale, in full satisfaction of the debt, and that the lender waives any right to pursue the borrower for the rest of the money.     

There are a lot of people who tout themselves as short sale experts in San Diego when they really have no idea how to get a short sale approval that protects the homeowner.  It is easy to get a lender to approve a short sale.  What is not easy is making sure the deficiency judgement terminology in the approval is removed.  It almost always requires escalating the short sale to the legal department of the lender to have the terminology removed.  It is a battle that is necessary to assure the homeowner will not face issues in the future with the deficiency.

Some people in the industry will tell their clients to proceed with a short sale without having the deficiency language removed.  They base this decision on whethere or not the loans are what is called "purchase money" and the CA law that inhibits lenders from pursuing deficiencies against these types of loans.  DON'T BE FOOLED!  You still need this language removed for many reasons that cannot be explained in a short blog!

If you are a home owner in distress and need a path cleared to make a decision click on this link and reserve a spot at our FREE SEMINAR on Avoiding Foreclosure to be held November 19.  It is comepletely free of charge! http://www.ListedValue.com/seminars

A short sale is a sale of real estate in which the proceeds from the sale fall short of the balance owed on a loan secured by the property sold. In this case the lender agrees to take less than the amount owed on the debt, in return for the sale of the property to a third party, usually at no cost to the borrower. Maxum Realty helps conduct short sales at NO COST to the borrower.