There is so much confusion surrounding SB 458 these days. You can tell who is on the ball in the land of Sacramento short sales by how they interpret SB 458. Agents who don't know what they are doing will say SB 458 makes short sales easier because now second lenders can't go after sellers. That is just not the case; it's not easier. Other agents will say SB 458 slows down short sales if they involve two loans on a short sale. Not true, either.
And yet a third bunch of 'em will say SB 458 lets sellers contribute to a short sale, and that just goes to show that people are really confused. I suspect what they know are three numbers in our numerical system, and that those 3 numbers somehow involve a problem with short sales. On that, they would be right.
SB 458 was a good idea gone dead wrong.
We already had SB 931. We didn't need SB 458 to amend Civil Code 580. What we needed was a law on the books that relieved sellers from liability after a foreclosure, but that didn't happen. What we got instead was a convoluted mess that guarantees to send some sellers directly to foreclosure.
We've always had the power to negotiate a release of liability in a short sale, especially concerning a second lien. That is until SB 458 came along. That bill effectively wiped out that power. Took it away. Snatched it. The only way to do it now is upfront. In advance. On the HUD as the offer is submitted to the bank. Before you know what the bank will do. And that removes some of our negotiating power. But that's exactly what I am doing and what any other knowledgeable Sacramento short sale agent is doing.
Because of SB 458, some banks will not let a seller contribute anything to the short sale whatsoever. You know what this does? It makes the buyer responsible. Buyer's agents should have a conversation with the listing agent about the probability and outcome of the short sale before writing an offer.
If you have a hard-money second or third loan, for crying out loud, get legal advice. Everybody should get legal advice before doing a short sale, but especially those who have hard-money loans. And don't rely on SB 458 to bail you out.
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Certified HAFA Specialist
My Sacramento Real Estate Listings
Elizabeth Weintraub is an author, home buying columnist for The New York Times-owned About.com, a Land Park resident, and a Land Park real estate agent who specializes in older, classic homes in Land Park, Curtis Park, Midtown and East Sacramento. Weintraub is also a Sacramento Short Sale agent who lists and successfully sells short sales throughout the four-county Sacramento area. Call Elizabeth Weintraub at 916.233.6759. Put 35 years of real estate experience to work for you. Broker-Associate at Lyon Real Estate. DRE License # 00697006.
The Short Sale Savior, by Elizabeth Weintraub, available at Amazon.com.
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