What is yesterday’s news (literally) may become tomorrow’s big headache for many homeowners who participate in a short sale.
A Feb. 3 article for CNNMoney.com explained how banks and other lenders are now pursuing former homeowners with “deficiency judgments” – asking them to pay the difference between what they owed on their mortgage and what the bank could finally sell the home for at auction.
This is even if the bank approved the short sale.
And get this: the poor homeowner featured in the article who had to declare bankruptcy because she was being chased for $65,000 from her short sale…was a real estate agent.
There are 30 states in which this is legal – fortunately, California is a “non-recourse” state and doesn’t allow deficiency judgments. But Californians still aren’t safe – if you refinanced your original loan (and that’s a lot of us), some or all of it may still be subject to a claim.
So how do you protect yourself? If you’re pursuing a short sale in California, add a savvy real estate attorney to your team (we just happen to know a few of them…).