The previous law allowed homeowners to sell their homes at a value less than their existing mortgage value, and the first-mortgage holder had to agree that the sale was accepted as full payment of the obligation, with no recourse.

The new law, Senate Bill 458 requires the same “no recourse” treatment for any secondary, or other junior loans involved in the transaction.  Up until now, it was possible for a homeowner to successfully complete a short sale, only to have the lender come back at a later date and require full payment for any short-falls.

Local real estate agents are applauding the new law.   A short sale transaction may take several months to complete because of the inability of lenders to make timely decisions.  These same local real estate agents are now concerned that the lenders may take even longer deciding the merits of a short sale.

From CAR:

SB 458 (Corbett) Anti-Deficiency – C.A.R .initially sponsored SB 458 to revisit the “anti-deficiency” issue of SB 1178 (Corbett, 2010), which was vetoed by Governor Schwarzenegger. As introducedSB 458 would have extended existing anti-deficiency protections to cover the refinance of purchase money mortgages, and new debt (cash out) incurred to acquire, construct or improve the home. C.A.R. and the lender groups reached an agreement to amend SB 458 to instead expand the provisions of existing law (SB 931 of 2010) which became effective this year. SB 931 requires a first mortgage holder to accept an agreed upon short sale payment as full payment for the outstanding balance of the loan, but does not apply to junior lien holders.

SB 458 extends the protections of SB 931 to junior liens effectively providing that any lender that agrees to a short sale must accept the agreed upon short sale payment as full payment of the outstanding balance of all loans.  In addition, this measure will clarify that this rule applies only to residences.

Equifax, based in Atlanta, has released the results of a study it conducted during the month of May analyzing national credit trends.

The company points to shadow inventory and REOs as the two major mortgage market depressors.

“Shadow inventory and real estate owned properties are still playing a dominant role in today’s mortgage market and slowing the pace of economic recovery,” said Craig Crabtree, SVP and general manager of Equifax Mortgage Services.

Equifax says shadow inventories are contributing to a continued rise in severe mortgage delinquencies and write-offs.

Total write-offs in 2010, including first mortgages and home equity installment loans, were $304.6 billion, whereas write-offs for 2006 and 2007 combined were $126.7 billion.

Register Here

Clear Capital’s report shows prices have fallen 11.5 percent over the previous nine-month period. A rate of decline this rapid has not been seen since 2008.

All the major metropolitan statistical areas tracked in Clear Capital’s report showed quarter-over-quarter price declines. The company says it’s a “sign of the continued volatility and fragility of home prices.”

At the regional level, home prices in the West, Northeast, and South regions have all crossed into double dip territory to record their lowest prices since the downturn began.

A HUD spokesperson described the curtailment as “painful cuts” and said they “would not have been made in better circumstances.”

In many cases, local housing counseling agencies – approved and funded in part by HUD – are the only source of help for distressed homeowners.

The federal agency, state housing associations, and even some lawmakers themselves have touted such HUD-approved counselors as the go-to source for homeowners struggling to make their mortgage payments.

Their services are free and organizations working to educate borrowers about foreclosure relief scams position HUD-approved counselors as their strongest defense.

Approximately 2,000 of the 2,700 agencies in the housing counseling program receive grant funding either directly or indirectly. Most also receive training assistance through the program. Each housing organization in the program averages about three to four counselors per agency.

Over the past two years, HUD-approved housing counselors have helped more than 4 million families struggling to keep their home, according to the federal agency.

Those within the industry contend that the HUD funding provides much-needed assistance to struggling homeowners and that families across the country — and the housing recovery — could be severely impacted by its elimination.

According to a statement from a group of civil rights and advocacy organizations, including the National Council of La Raza, nonprofits providing these free, HUD-approved services will be forced to lay off skilled housing counseling staff and shut down counseling centers across the nation at a time when our housing crisis is at its peak.

Commenting on the funding cut, Faith Schwartz, executive director of HOPE NOW, said, “Housing counseling dollars remain critical to homeowners at risk…Housing counselors have a proven track record of success with regard to pre-purchase and foreclosure prevention counseling. Eliminating an important source of funding is concerning as industry and non-profit counselors have been working together to keep people in their homes.”

With HAMP, HAFA, and now grant money going away, the private sector is going to need to step up even more to address this housing crisis.

Unfortunately for mortgage companies, this is not a new trend, but one that TransUnion has been consistently finding in its surveys for the past three years. The only slight positive TransUnion could report is that the number of consumers current on credit cards, but delinquent on their mortgages had slightly declined. The number, however, is still more than 70% higher than at the start of what’s now being called the “Great Recession.”

“The percentage of consumers current on their credit card payments and delinquent on their mortgages first surpassed the percentage of consumers current on their mortgages and delinquent on credit cards in the Q1 2008,” the company said in a statement. “Although many industry analysts believed that a reversion to the conventional payment hierarchy would ensue once the recession had concluded, this has not been the case.”

Apparently, current economic and housing environment has consumers reevaluating their priorities.

In terms of cost, HAMP is far under the $30 billion estimate that the Treasury set aside, having spent only $1.2 billion so far. Guess that’s what happens when distressed homeowners can’t get banks to talk seriously about these government-sponsored loan modifications.

The bill now moves to the Democrat-controlled Senate, where it stands little chance of getting the votes needed to take HAMP off life-support. The bills will never make it out of the Senate and, even if they do, the President will veto. Can you say a HUGE and colossal waste of time? America, you’re paying for this Republican vs. Democrat chess match that should have ended in a stalemate a long, long time ago. The Republicans proposing these program closures know it’s a waste of time, they just want to CYA (cover their own asses) while still looking good to their constituency. That’s what American politics has become—CYA, clever sound bites, not doing anything to upset your voters and sticking with your party no matter what the issue.

Meanwhile, well over a million Realtors are somehow supposed to squeeze out a living, when first-time buyers are scared to death to commit to a 30-year loan, unemployment is high, mortgage approvals are extremely difficult to get, foreclosure rates are through the roof, property values refuse to stabilize with any certainty and an unknown amount of shadow inventory is lurking around the corner. And that doesn’t even take into account the negative affect on all the builders, construction workers, home inspectors, property appraisers and companies who make products for the home building industry.

So “thank you” to both Republicans and Democrats for doing essentially next to nothing of value to help America out of this recession. While you’re arguing and grand-standing, more Americans are losing their homes, their jobs, their medical insurance, and their belief in the American dream. You have done FAR more harm than good.