How will I know that I am being released from the debt?

Answer: It will be stated clearly on the bank’s short sale approval.

As I have posted multiple times on our blog and in various spots on this website, there is a difference between a “Full & Final Satisfaction of the Debt” and a simple lien release.

If you have a recourse loan, make sure that your lender issues a “Full & Final Satisfaction of the Debt”, which means you will not be pursued by your lender for the deficiency. Different lenders state this using different verbiage, but if you do have a recourse loan, you want to make sure that it clearly states that the debt is settled and the lender will not pursue a deficiency. We successfully negotiate full and final satisfactions on all recourse loans for our clients, or we recommend they not close escrow.

Any short sale approvals on our site that do not include “Full& Final Satisfaction” verbiage are on non-recourse loans that are not pursuable under CA law i.e. 1st liens or non recourse 2nd liens.

Note, as of July 2011, with the passage of  CA SB 458, lenders can no longer pursue a deficiency after a short sale in California.  In other words, they must take whatever they get in the short sale and call it a day.

Here is a link to blog post on our blog on this topic:

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