On July 15, 2011, the new SB 458 law went into effect. SB 458 prohibits junior lenders (second deeds of trust, HELOC loans, etc.) from seeking any deficiencies against borrowers if the lender agreed to accept a short sale. The real question is whether SB 458 will make it harder to get short sales closed? In most short sales, there is not enough equity to pay the junior lenders. For any junior lender being asked to take the loss of the deficiency in a short sale, the only question they need to ask is - whether a short sale will get more money back to the junior lender than a foreclosure? If the answer is NO, and the junior loan is not a purchase money loan, the junior lender has recourse against the borrower if the junior lender is not paid in full. Unlike the first lender, the junior lender will not foreclose. They will wait for the first lender to foreclose which will wipe-out the junior loan. Once that happens, the junior lender can file a lawsuit against the borrower for what is owed. If successful in its lawsuit, the junior lender can collect everything owed to them by the borrower unless the borrower files bankruptcy. As you can see, SB 458 may make it harder to get short sales closed. If you or any one of your short sale clients needs any legal advice with regard to SB 458, please contact our offices for a FREE consultation. Thank you. Paul D. Bojic, Esq. Bojic, Pyfrom & Associates 35900 Bob Hope Drive, Suite 215 Rancho Mirage, California 92270 Office (760) 202-1010 Facsimile (760) 202-4747 RealEstateAttorney1@msn.com

What if you could wipe out the second mortgage on your home? Think of all the equity you could build back up? Current bankruptcy law allows judges to approve the loan modifications of the terms of certain debts. In the case of second mortgages, if the value of the property falls below the loan amount, debtors potentially could reduce the balance of the loan to equal the current value of the property. Here is a how it works: 1. Home is worth $400,000.00. 2. The first mortgage is $400,000.00 3. The second mortgage is $100,000.00 4. All lenders are only secured up to the value of the property. 5. The second lender is unsecured because the property has no value left from the first lien. 6. In a Chapter 13, you can wipe out the second lender. 7. The second mortgage is treated as an unsecured creditor. 8. The second lender will not be able to collect on the mortgage after the bankruptcy discharge and the homeowners will still get to keep the house. 9. The homeowner would not even have to pay the lien when they sell the house. Additional liens on your home could also be wiped out in the case of a Chapter 13 personal bankruptcy filing. For a FREE consultation a call us! Paul D. Bojic, Esq. Law Offices of Bojic, Pyfrom & Associates 35900 Bob Hope Drive, Suite 215 Rancho Mirage, California 92270 Office (760) 202-1010

SB 458 extends the protections of SB 931 that have been in effect since January 1, 2011, to ensure that any lender that agrees to a short sale for a residential 1 to 4 property, must accept the agreed upon short sale payment as payment in full of the outstanding balance of all loans. This applies to 2nd mortgage liens, 3rd mortgage liens, etc. (junior lien holders, home equity line of credit, HELOC). Under previous law (SB 931), a first mortgage holder could accept an agreed-upon short sale payment as full payment for the outstanding balance of the loan, but unfortunately, the rule did not apply to junior lien holders. SB 458 extends the protections of SB 931 to junior liens. For short sale sellers, SB 458 means that a short sale junior lien holder cannot require additional compensation (cash contribution or promissory note) as part of the short sale approval. SB 458 makes sure that after close of escrow of the short sale, there is no possibility that the lender will come after the borrower/seller. In effect, the lien and (personal) liability will be released by all lenders involved in a short sale. As always, if you have any questions with regard to SB 458 or any Real Estate, Bankruptcy and Evictions questions, please feel free to contact our offices for a FREE consultation at (760) 202-1010 or email RealEstateAttorney1@msn.com