SB 1259

Abstract

Amends the Code of Civil Procedure. Defines "short sale" as the sale of real estate that is subject to a mortgage for an amount that is less than the amount owed to the mortgagee on the outstanding mortgage loan. Provides that in a foreclosure of residential property, if the mortgagor presents to the mortgagee, which is a banking organization or corporation, a bona fide written offer from a third party to purchase the property in foreclosure which is for an amount that constitutes a short sale, and the mortgagor requests that the mortgagee approve the short sale, then the mortgagee must respond within 30 days and must agree to the short sale unless there is a reasonable justification to not do so. Provides that the fact that the proceeds of the short sale would be insufficient to satisfy the mortgage note does not constitute a reasonable justification. Provides that if the mortgagee approves the short sale, the mortgagee agrees as part of the closing of the short sale: to termination of the mortgagor's interest in the property and acceptance the sale proceeds in full satisfaction of the outstanding mortgage loan; to relieve from personal liability all persons who may owe payment or the performance of other obligations secured by the mortgage, including guarantors; and to waive all rights to a personal judgment for deficiency against the mortgagor and all other persons liable under the mortgage.