Legal Question in Real Estate Law in California
I'm in a short sale.
Both loans are purchase money.
1st is with Indymac
2nd is with greentree.
I have an old short sale approval from Indymac 1st which had verbiage in there for lien release only, I expect the new short sale approval would be lien release only also.
I'm told with greentree their's would be lien release only with verbiage indicating their ability to pursue me for future deficiencies.
In talking through this with my realtor, It�s sounding like it may be best for me to allow the home to go to foreclosure since in CA purchase money loans, when lender takes back the home in non judicial foreclosure, neither the 1st or 2nd can come after me for the difference of what's owed...
and if I accept the short sale approval...now I would have signed something that indicates they CAN/MAY come after me for the deficiency?
please help...my realtor is needing an answer...thanks, Kelly O�Connor
1 Answer from Attorneys
If you sign a form with Greentree, indicating that they can pursue you for a future deficiency, you will have waived your purchase money mortgage protection of Code of Civil Procedure section 580b.
The courts have held that a buyer cannot waive the antideficiency protection in advance. (See Freedland v. Greco (1955) 45 Cal.2d 462, 467 [289 P.2d 463]; Valinda Builders, Inc. v. Bissner (1964) 230 Cal. App.2d 106, 112 [40 Cal. Rptr. 735]; 3 Witkin, Summary of Cal. Law (9th ed. 1987) Security Transactions in Real Property, � 161, p. 660.) This means the lender cannot enforce a written agreement at the time of entering the loan transaction that waives your antideficiency protection.
However, section 580b can be waived by the buyer's subsequent conduct. (See 3 Witkin, Summary of Cal. Law, supra, � 161, p. 660; Russell v. Roberts (1974) 39 Cal. App.3d 390, 394-39
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