California Governor Jerry Brown has signed SB 458 into law, preventing holders of second mortgages from pursuing a deficiency judgment on a borrower for unpaid debt after a short sale.
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Under a previous law, a first mortgage holder could accept an agreed-upon short sale payment as full payment for the outstanding balance of the loan but the law had not pertained to junior lien holders.
Now any lender that agrees to a short sale must accept the agreed upon short sale payment as payment in full on the outstanding balance of all mortgages, according to the California Association of Realtors.
The bill is immediately effective as a law.
