Borrower's Anti-Deficiency Protections Expanded

BORROWERS' ANTI-DEFICIENCY PROTECTIONS EXPANDED Effective January 1, 2014, California’s anti-deficiency laws that generally prohibit a foreclosing lender from obtaining a deficiency against a borrower have been expanded to also prohibit the lender from claiming that a deficiency is owed or collecting on a deficiency. Existing law already generally prohibits a short sale lender from claiming a deficiency is owed or from collecting a deficiency. Currently, certain lenders and debt collectors contact borrowers after foreclosure in an attempt to collect on deficiencies claimed to be due and owing. The new law, Senate Bill 426, will generally prohibit a lender from claiming that a deficiency is owed, such as on a credit report, or from collecting a deficiency. The new law applies to loans foreclosed upon by a trustee’s sale, as well as loans secured by purchase-money, owner-occupied, one-to-four residential unit properties (including refinances with no cash out). A lender, however, can pursue a deficiency against a guarantor or other surety (such as a mortgage insurer), or pursue other security for a cross-collateralized loan. In a related case, a California appellate court recently decided that a lender is prohibited from pursuing a deficiency against a borrower after a short sale of a purchase money loan (Coker v. JP Morgan Chase Bank (2013 WL 3816978) filed July 23, 2013). The Coker case involved a borrower who successfully negotiated a short sale, but agreed to remain responsible for the deficiency on a purchase money loan. After close of escrow, the lender demanded that the borrower repay over $116,000. The court, however, ruled that the anti-deficiency protection for purchase money loans under section 580b of the California Code of Civil Procedure applied not just to foreclosures, but to short sales as well. The court also decided that the waiver of a borrower’s anti-deficiency protection under section 580b was void as against public policy. The Coker case may help borrowers with short sales that closed escrow before California’s short sale anti-deficiency laws under section 580e came into effect in 2011 for one-to-four residential units (first trust deeds only starting January 1 and all deeds of trusts starting July 15). This court decision is especially significant for short sale borrowers given that another court recently decided that the statutory anti-deficiency protections under section 580e do not apply retroactively to a short sale that occurred before the statute was enacted (Bank of America, N.A. v. Roberts (2013 WL 3754831) filed July 17, 2013).

7 Metro Areas with the Fastest Rising List Price

Santa Barbara County has the largest growth!

C.A.R. reports 4th quarter 2012 housing affordability

LOS ANGELES (Feb. 25) – Higher home prices offset lower interest rates to reduce housing affordability in California during the fourth quarter of 2012, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported.

The percentage of home buyers who could afford to purchase a median-priced, existing single-family home in California decreased to 48 percent in the fourth quarter of 2012, down from 49 percent in third-quarter 2012 and from 55 percent in fourth-quarter 2011, according to C.A.R.’s Traditional Housing Affordability Index (HAI). 

C.A.R.’s HAI measures the percentage of all households that can afford to purchase a median-priced, single-family home in California.  C.A.R. also reports affordability indices for regions and select counties within the state.  The Index is considered the most fundamental measure of housing well-being for home buyers in the state.

Home buyers needed to earn a minimum annual income of $66,940 to qualify for the purchase of a $353,190 statewide median-priced, existing single-family home in the fourth quarter of 2012.  The monthly payment, including taxes and insurance on a 30-year fixed-rate loan, would be $1,670, assuming a 20 percent down payment and an effective composite interest rate of 3.49 percent.  The effective composite interest rate in third-quarter 2012 was 3.72 percent and 4.30 percent in the fourth quarter of 2011.

Housing affordability results were mixed at the regional level, with affordability improving from the third quarter of 2012 in Alameda, Contra Costa, Marin, Napa, Los Angeles, Ventura, San Luis Obispo, Santa Cruz, Fresno, and Kings counties.  However, homes in San Francisco, Solano, Riverside, San Bernardino, Monterey, Santa Barbara, Madera, Sacramento, and Tulare counties were less affordable during fourth quarter 2012.

At an index of 76 percent, San Bernardino and Kings counties were the most affordable counties of the state.  Conversely, San Francisco County was the least affordable, with only 22 percent of the region’s households able to purchase the county’s median-priced home. 

See C.A.R.’s historical housing affordability data.

See first-time buyer housing affordability data.

Leading the way…® in California real estate for more than 100 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States with 155,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.

CALIFORNIA ASSOCIATION OF REALTORS®
Traditional Housing Affordability Index

STATE/REGION/COUNTY	Q4 2012	Q3 2012		Q4 2011
Calif. Single-family home	48	49		55
Calfi. Condo/Townhomes	59	60		63
Los Angeles Metropolitan Area	50	51		56
Inland Empire	67	68		71
San Francisco Bay Area	34	35		42
U.S.	69	67		70
San Francisco Bay Area
Alameda	36	34		39
Contra-Costa (Central County)	31	28		37
Marin	28	27		29
Napa	48	45		50
San Francisco	22	25		26
San Mateo	24	24		29
Santa Clara	32	32		40
Solano	73	77		76
Sonoma	46	46		51
Southern California
Los Angeles	44	42		48
Orange County	34	34		38
Riverside County	62	63		66
San Bernardino	76	77		78
San Diego	43	43		46
Ventura	48	47		49
Central Coast
Monterey	50	52		56
San Luis Obispo	40	37		41
Santa Barbara	27	31		41
Santa Cruz	34	30		37
Central Valley
Fresno	70	69		71	r
Kings County	76	74	r	75
Madera	74	76		75
Merced	74	74		77
Placer County	64	64		67
Sacramento	71	73		74
Tulare	71	73		73

r = revised

CALIFORNIA ASSOCIATION OF REALTORS®
Traditional Housing Affordability Index

C.A.R. Region	Housing  Affordability Index	Median Home  Price	Monthly Payment Including Taxes & Insurance	Minimum  Qualifying Income
Calif. Single-family home	48	$         353,190	$              1,670	$           66,940
Calif. Condo/Townhomes	59	$         272,760	$              1,290	$           51,690
Los Angeles Metropolitan Area	50	$           326,470	$               1,550	$             61,870
Inland Empire	67	$           209,260	$                   990	$             39,660
San Francisco Bay Area	34	$           593,220	$               2,810	$           112,420
U.S.	69	$           178,900	$                   850	$             33,900
San Francisco Bay Area
Alameda	36	$           522,890	$               2,480	$             99,100
Contra-Costa (Central County)	31	$           631,530	$               2,990	$           119,680
Marin	28	$           812,490	$               3,850	$           153,980
Napa	48	$           385,200	$               1,830	$             73,000
San Francisco	22	$           777,090	$               3,680	$           147,270
San Mateo	24	$           782,500	$               3,710	$           148,300
Santa Clara	32	$           685,000	$               3,250	$           129,820
Solano	73	$           225,540	$               1,070	$             42,740
Sonoma	46	$           382,560	$               1,810	$             72,500
Southern California
Los Angeles	44	$           350,080	$               1,660	$             66,350
Orange County	34	$           568,600	$               2,690	$           107,760
Riverside County	62	$           240,840	$               1,140	$             45,640
San Bernardino	76	$           152,860	$                   720	$             28,970
San Diego	43	$           405,360	$               1,920	$             76,820
Ventura	48	$           440,250	$               2,090	$             83,430
Central Coast		0
Monterey	50	$           329,000	$               1,560	$             62,350
San Luis Obispo	40	$           399,310	$               1,890	$             75,680
Santa Barbara	27	$           546,510	$               2,590	$           103,570
Santa Cruz	34	$           520,000	$               2,460	$             98,550
Central Valley		0
Fresno	70	$           152,360	$                   720	$             28,870
Kings County	76	$           146,210	$                   690	$             27,710
Madera	74	$           133,750	$                   630	$             25,350
Merced	74	$           133,450	$                   630	$             25,290
Placer County	64	$           302,630	$               1,430	$             57,350
Sacramento	71	$           193,190	$                   920	$             36,610
Tulare	71	$           141,810	$                   670	$             26,880