I received this info from the California Association of Realtors....it was a major victory for everyone when Govenor Brown signed into law a C.A.R. sponsored bill, Senate Bill 458, prohibiting a deficiency after a short sale for one-to-four residential units, regardless whether the lender is a senior or junior lienholder. Going into effect immediately for transactions closing escrow from July 15, 2011 forward, both senior and junior lienholders cannot go after the seller (borrower) to pay a deficiency. It's about time this happened for property owners. With the loss of jobs and loss of income suffered by every day workers, this will make their lives easier to get back on track after selling their homes. Any one trying to waive this rule shall be void and against public policy. A lender can not require a seller/ borrower to pay an additional compensation in exchange for short sale approval but the new law does not forbid a borrower for voluntarily offering a money contribution to the lender in hopes of obtaining a short sale. Why someone would want to volunteer payment I have to really think about. It will cost that lender much more to foreclose, but all banks are different to work with. There are exceptions to the new law - which include a lender seeking damages for a borrower's fraud or waste, a borrower that is a corporation, LLC, or limited partnership. As a Certified Distressed Property Expert I am qualified to handle short sales and have done so in the past with success. If you know anyone who could use my help and services, please let me know! Have a super week!