From the bill analysis of SB 306:
5. Requires a beneficiary or his or her authorized agent to provide a short-pay demand statement to an entitled person or his or her authorized agent within 21 days of receiving a demand for the statement from the entitled person or his or her agent, but would provide that if a beneficiary or his or her authorized agent elects not to proceed with the short-sale transaction, he or she is not required to provide a short-pay demand statement; instead, the beneficiary or his or her authorized agent is required to provide a written statement regarding its decision not to proceed with the transaction, within 21 days of receiving the demand for the short-pay demand statement.
6. Further provides that if the terms and conditions of the short-pay agreement require approval by the beneficiary of a closing statement or similar document prepared by the escrow holder, approval or disapproval must be provided no more than four days after the beneficiary receives the closing statement, except as specified.
This looks to be an attempt by the legislature to speed up short sales. Basically if you put an offer on a short sale the bank would have to respond within 21 days. Now there is nothing that says the bank won't just say the payoff is the full amount and shove off but then short sales would have a much harder time closing. This could possibly spur lenders to streamline the process or maybe move to a pre-approved short sale model.