Real Estate Law Updates – Short Sales and Loan Modifications

Real estate law update from J. Scott Souders, P.C., Attorney at Law:

For your review are brief summaries of new cases:

1. CCP 580e, Which Became Law in July 2011, Which Prevents Deficiency Judgment on Short Sales, is Not to be Applied Retroactively Prior to July 2011.

In the case of Bank of America vs. Roberts 217 Cal App 4th 1386, the Court of Appeal decided that Bank of America could sue Mrs. Roberts to obtain a deficiency on her short sale on its non purchase money First Deed of Trust Note because Bank of America agreed to her short sale and entered into an agreement with Mrs. Roberts receiving short sale proceeds prior to July 2011.

2. Plaintiffs Fail in Their Case to Sue Wells Fargo Claiming Wells Fargo Failed to Issue a Loan Modification Agreement in Violation of Their Own Rules.

gavel_300In the case of Lucia vs. Wells Fargo Bank 798 F. Supp. 1059, the Federal District Court determined that it remains discretionary with each bank whether or not they issue a loan modification agreement. If the bank fails to even follow its own guidelines that does not rise to a cause of action in favor of a borrower. The banks guidelines are not covenants that can be relied on by borrower.

Comment: Cases against banks generally are losers if the claim is that the bank didn’t follow proper procedures or their own guidelines and had they done so the borrower would have obtained a loan modification.

Scott Souders is a real estate attorney who has practiced real estate law in excess of 37 years in Southern California.

Disclaimer: The Real Estate Law Update cites cases or statutes which are summarized and should not be relied upon without fully reading the cases or statute in the advance sheets and shepardizing the same and consulting with your own attorney.