Dealing with homeowners in a short sale.

I have often heard of this and in dealing with homeowners on short sales I have referred to this law. Thank you for supplying this link!!! Bookmarking this for sure!

I am curious to the thoughts and opinions out there about how banks are getting around this law right now. Some people are acting like this law does not exist, and I am talking lawyers, banks, etc....notable real estate attorneys (in my area) as well.

One way banks have gotten around this recently:
---Putting in their initial mortgage contracts that they (banks) do have the right to come after the homeowner on the mortgage if at some point in the future there is a deficiency that is owed. In order to get a mortgage from certain banks, they are placing these clauses in all of their contracts, so they can use this contract loophole to get around federal law.
---Some banks are also putting in their SHORT SALE contracts, that they have the right to chase the homeowner for the deficiency. Supposedly, these banks won't sign the dotted line to enable the short sale to happen, unless the homeowner signs that contract (which includes the fact that they can be chased). Obviously, a frustrating situation that the banks can override this federal law in their own short sale contract!!!

2nd mortgage: From what I understand (and I can be corrected!) this "relief" law only applies to the first mortgage. If there is a second mortgage on a house, the second can legally chase the homeowner for the deficiency (although from what I understand, this does not happen often, and it is still far better to sell through a short sale and take this risk of having paid off some of the debt via a short sale, rather than none of it risking foreclosure.)

In talking to homeowners about a short sale, I have always informed them about the above...that the banks may write something in their short sale contract like the chasing that is out of our control, despite the federal law that is in place. Many banks do not yet do this, but there are some that do. I like to be upfront and let them know that yes, it is a possibility. However, I also like to point out, that while these things are indeed possibilities, the fact that by proceeding, they have a chance the bank won't chase them, and they are taking action in doing their best to take care of some of the debt, which is better for their credit than throwing their hands up and risking foreclosure.

I'm curious of other contentions against this law (in real life situations where the law has not been able to carry forth), because I have brought it up to some people who seemed to be "linked to those attorneys in the know" and they act like banks are still able to chase (which doesn't make sense to me), but maybe I need to talk to the direct source, and/or maybe they are referring to the above situations where the banks have it written in their contracts that they can chase for deficiencies.

I'm glad to have this official link to the law ....thanks again!
Louisa