Short-Sighted on Short Sales

Today in Coker v. JPMorgan Chase Bank (S213137 Jan. 21, 2016) the California Supreme Court affirmed a Court of Appeal ruling that California's anti-deficiency statute, CCP 580b, precludes a deficiency judgment against a home loan borrower not only when the bank initiates a foreclosure sale, but also when the borrower initiates a short sale. After approving the short sale and receiving those sale proceeds, Chase sent Ms. Coker a demand letter for the $116,686.89 balance remaining on her loan. She then filed a declaratory relief action, to which Chase demurred, which demurrer was sustained by the trial court. The Court of Appeal reversed, and our Supreme Court agreed with the Court of Appeal. What is remarkable about Coker is that, apparently, some mid-level manager at Chase actually authorized the demand letter after approving the short sale. In a spectacularly-bad-for-PR turn of events, there is now a published case documenting this. Not only that, but if the tactic had succeeded, what would have been the outcome? Short sales would have ground to a halt. Then what would have been the result of that? Borrowers would have sat in properties for months, often over a year, while the lender went through all the machinations required to foreclose and then evict the former homeowner, all the while the property deteriorates, losing even more value. Chase should consider itself lucky its ill-conceived gambit did not succeed. read the opinion here: