Debt Forgiveness
January 1, 2011 marked the implementation of California SB 931.
What’s the Big Deal About SB 931?
Basically this bill says that if a primary or first lien-holder approves a short sale they are then obligated “to accept the sale proceeds as full payment and to fully discharge the remaining amount of the indebtedness on the first deed of trust or first mortgage.” Read the full language of SB 931 here.
An exception to note: “If the trustor or mortgagor commits either fraud with respect to the sale of, or waste with respect to, the real property that secures the first deed of trust or first mortgage, this section shall not limit the ability of the holder of the first deed of trust or first mortgage to seek damages and use existing rights and remedies against the trustor or mortgagor or any third party for fraud or waste.
‘Stripping’ the home’s appliances, fixtures and equipment can obviously harm the borrower by creating an exception to SB 931, so don’t do it!
As always, any short sale requires documented hardship conditions. Other conditions apply; read other pages and articles on this site.
Vickie Nagy is HAFA Certified, a CDPE Certified Distressed Property Expert and PSC Pre-Foreclosure Specialist Certified.
Vickie Nagy concentrates on helping sellers reach a successful short sale in San Ramon CA, Dublin CA, Danville CA and Pleasanton CA.
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