Foreclosure in 85739>Question Details

Cheryl Lewis, Both Buyer and Seller in 85345

I purchased a home for my mom in AZ. I can no longer pay the house it is worth half of what we owe. should I forclose of do a deed in lue.?

Asked by Cheryl Lewis, 85345 Wed Sep 22, 2010

We own another small home besides our primary residence and it is paid for. I am planning on putting my mom back in it as soon as the lease is up. Can the bank come after that property?

Help the community by answering this question:


Hi Bob,

So sorry that you got upset. It appears that you've taken some comments too personally, when all we are trying to do is to give Cheryl the answer(s) she seeks. I doubt that any comments are meant to place somebody on a "high horse" or are "full of crap" or anything else negative. We are all just trying to help. Sorry if we offended you, made you upset, insulted your intelligence with 10 yrs in RE business, but that's certainly no reason to address me as "pal" or to say "full of crap" about another RE professional in this public forum. Sorry again if my advice to Cheryl upset you, but I only intended to advise Cheryl to seek the advice from a lawyer, which is something your first 2 posts did not even state. We are all just trying to help Cheryl. So, can't we all just get along? It sounds like you don't like advice contrary to yours or what you consider to be "bad advice." Sorry, again, Bob, and I hope you will forgive my apparent rudeness.
2 votes Thank Flag Link Thu Sep 23, 2010
HI Cheryl,

YOU NEED TO CONSULT WITH AND GET ADVICE FROM A REAL ESTATE ATTORNEY. Us Realtors are not allowed to dispense legal advice and certainly not qualified to interpret Arizona's anti-deficiency statute/law. So, YOU NEED TO CONSULT WITH AND GET ADVICE FROM A REAL ESTATE ATTORNEY regarding your foreclosure questions.

Exclusive Buyer's Agent
2 votes Thank Flag Link Wed Sep 22, 2010
Cheryl, whatever you do...DO NOT listen to Bob Movin-On in Hartford, CT to figure out what to do with your situation in AZ. Anyone who says that a short sale is a "form of foreclosure" needs to have their head examined. Sorry Bob, but you're full of crap. A short sale is not a "form of foreclosure", as you say it is.

If you truly are a Mortgage Broker that is licensed in CT, that is truly a scary thought A deed-in-lieu is commonly referred to as a "friendly foreclosure". In other words, your credit still suffers as much as it does with a foreclosure, but you were "friendly" with the lender. To put it another way, you made their life easier because you didn't ask them to deal with the buyer in a short sale transaction, they didn't have to deal with a buyer, etc.

What Bob forgot to tell you is that he is taking the easy way out and telling you only part of the story. The waiting periods are a very small part of the overall equation. Yes, the waiting periods to purchase your next home are the same for a deed-in-lieu vs a short sale, just as he said.

The problem is, he conveniently left out the effects on your credit report for a short sale vs a deed-in-lieu. With a deed-in-lieu being considered the same as a foreclosure, according to the leading credit experts, this could obviously pose a problem.

Also(and more importantly), he failed to mention the effects of a potentially higher deficiency with a deed-in-lieu. In other words, if you simply hand your home back to the bank (whether through a deed-in-lieu or foreclosure), you run the risk of having a higher deficiency when the bank finally sells your home, at whatever they choose to sell it for.

In the case of a short sale (if you're working with an agent who is experienced in the short sale process), you are selling for MARKET VALUE, which almost always is higher than the bank selling it at an REO (bank-owned) price.

So, at the end of the day, you need to ask yourself one question... Would you rather be in control of what your home sells for, or would you rather just hand it back to the bank and let them decide, and come after you for the difference?

Again, call someone who is experienced in selling short sales in the Phoenix market. Don't rely on guys who come into Trulia and give you half-truths, in hopes of getting your business.
1 vote Thank Flag Link Thu Sep 23, 2010
Hey Paul, get off your high-horse pal. I've been a broker for 10 years, and I fully understand the implications of "interpreting the law" for homeowners. Go back and read my comment. I didn't interpret anything. I used quotes directly from the statute, in order to enlighten Fred from PA who said "Yes, the bank can get a deficiency judgement and attach the other home if they chose to".

As an agent in Arizona, you should know that this simply is not the case. In 90% of our short sale deals, we meet with both an attorney and an accountant before deciding on the best option.

I agree, we should not give legal advice or interpret laws as real estate agents and brokers. That being said, I think that when people come in here to ask questions, they are looking for agents to do more than give the canned answer of "You need to talk to an attorney". I feel they are also coming to this forum to hear about experiences that we have had as real estate agents.

So, Cheryl, I agree with everyone here. Consult with an attorney and a CPA to go over your legal and tax ramifications. If a short sale is in your best interest, make sure to find an agent who has experience with the short sale process.
1 vote Thank Flag Link Wed Sep 22, 2010

Without knowing your specific issues, which a real estate agent is not qualified to provide anyway and with so many legal ramifications to your situation, you should spend the $ and contact an attorney.

Some possibilities for legal assistance if you cannot afford same:

Good luck to you!
1 vote Thank Flag Link Wed Sep 22, 2010
Cheryl this is truly a legal matter with financial inplications. Their are attorneys who know both tax law and real estate law. It may be beneficial to your cause to consult with them. One note, the manner in which you bought the home for your mother will play a part in this. Meaning did you buy the home as a second home, or as an investment property.

I hope all works out the best for you Cheryl. Hope you have a great day!
1 vote Thank Flag Link Wed Sep 22, 2010
You should consult with an Attorney before you make any decisions. There may be other alternatives for you but you need to know your options before you make decisions. You should consult with your Tax Person too as there can be tax consequences for either option.
1 vote Thank Flag Link Wed Sep 22, 2010
Cheryl Lewis

Dear Cheryl:

These are difficult decisions. Without knowing all of the partiuclars of your loan agreements, it is difficult to evaluate your personal situation in this public forum.

To review all of your options, see the "Short Sale Advisory" published by the Arizona Department of Real Estate for homeowners. The advisory addresses foreclosure, deed in lieu of foreclosure, short sales and loan modifications. To see a copy see the Arizona Short Sale advisory link at: This advisory will answer many of your questions.

Regarding your personal situaltion you should review this matter with a real estate attorney (the advisory provides information here also) and your accountant.

Your realtor can help you with a short sale if you choose to go in that direction.

May I wish you the best.

Jeff Masich
Arizona Homes and Land
HomeSmart Realty
1 vote Thank Flag Link Wed Sep 22, 2010
Cheryl - the first thing you should do is consult with an attorney who is familiar with this scenario, and then seek out a REALTOR who carries the SFR designation (Short Sale and Foreclosure Resource).

You have a couple of low cost options for legal help. The first option is the Lawyer Referral Service. Sponsored by the Pima County Bar Association, the Lawyer Referral Service has a panel of experienced attorneys in many areas of the law including real estate and foreclosure. For a non-refundable fee of $35 due at the time of the referral, the Lawyer Referral Service will provide you with a licensed attorney who will provide you with a 30 minute consultation. This is a low cost solution for someone who just needs a one-time consult. Here is a link to their service:

The second option is the QUILT Program

The QUILT Program is comprised of local attorneys who provide legal services to financially eligible clients at the program’s reduced rates in certain legal areas. Eligibility for reduced costs services is based on household size and monthly income. Here is a link to their service:…

Once you've covered yourself with legal advice, contact a reputable local real estate brokerage, and ask the manager whom he (she) would reccomend as best able to service your real estate needs.

Good luck with everything, Cheryl.
1 vote Thank Flag Link Wed Sep 22, 2010
Thank you for your question about whether or not to go throug a judicial foreclosure or provide the lender a deed in lieu of judicial foreclosure. I suggest contacting a lawyer or financial planner for further guidance because of the complex issues involved in your situation, i.e. another primary residence.
1 vote Thank Flag Link Wed Sep 22, 2010
I would suggest you do a short sale and keep foreclosure off your credit. We can sell the house for less than you owe. We will negotiate with the bank to take less than you owe.

Please call us directly to discuss your specific situation. Our services are FREE to homeowners. We look forward to hearing from you.

Eli Givoni, Director
Short Sale Department, LLC
Serving all 50 states
0 votes Thank Flag Link Thu Jan 13, 2011
Cheryl. First things first. Contact an attorney to get specific information regarding your individual situation. If you do not know an attorney, contact an agent in the area where your property is located that is qualified to do short sales. This is an agent who has done more than one or two that happened to fall in his lap. Or, who with an agent who works with a qualified short sale negotiation company. This will ensure that you will be fully apprised of all your options, including, short sale, foreclosure or deed in lieu. Together, you will be able to decide which option is best for you. There is a lot of infomation being given out by agents that are not in AZ and do not know what the AZ specific laws are. Please tred lightly.
0 votes Thank Flag Link Thu Sep 23, 2010
OMG enough already. Cheryl being in the business of helping people that have gone through all forms of foreclousre, yes deed-in-lieu-of and short sale are forms of foreclousre, deed-in-lieu-of will be your best bet if the bank will bite. Deed-in-lieu-of is much easier than short sale because it is you and the bank not you the bank and all the other negotiators that get added such as realtors lawyers and the buyer. See deed-in-lieu-of and short sale have the same ramifications. I will attach the ramifications of all forms of foreclosure for your viewing I find most that go through any form of foreclosure are not aware of all they are up against.

Ramifications of Foreclosure, Short Sale or Deed-in-lieu-of Foreclosure

Here are some of the ramifications of foreclosure, short sale or deed-in-lieu-of-foreclosure, there are many more like; insurance rates, your job (yes employers are checking credit records these days).

Your credit score will be reduced by 200-400 points, short sale and deed-in-lieu-of a little less 100-200 points.

All forms of foreclosure stay on your credit report for 10 years.

After you have gone through foreclosure, short sale or deed-in-lieu-of-foreclosure there will be what is known as the "waiting period", this period of time varies for each and can be reduced if you had some type of extenuating circumstances that caused the foreclosure:
Waiting Periods to Buy After Foreclosure – “YES” Short Sale and Deed-in-lieu-of are forms of foreclosure
• Buying after a Walk Away Foreclosure
The waiting period is 7 years
• Buying after a Foreclosure
The waiting period is 5 years with 20% deposit up to 7 years.
• Buying after a Foreclosure with Extenuating Circumstances
The waiting period is 3 years with 10% deposit up to 7 years.
• Buying after a Deed-in-Lieu-of Foreclosure
The waiting period is 2 years with 20% deposit, 4 years with 10% deposit up to 7 years.
• Buying after a Deed-in-Lieu-of Foreclosure with Extenuating Circumstances
The waiting period is 2 years with 10% deposit.
• Buying after a Short Sale
The waiting period is 2 years with 20% deposit, 4 years with 10% deposit up to 7 years.
• Buying after a Short Sale with Extenuating Circumstances
The waiting period is 2 years with 10% deposit.

In addition to the waiting period and minimum down payment, you will be required to have a minimum FICO score and the home purchase must also be the principal place of residence, not a rental nor a vacation home.

Lastly, most loan applications will ask the dreaded question "Have you ever been foreclosed on?" this stays with you for life, many think that because it will not show up on the credit report after 10 years they can answer "no", well lying on a loan application is a felony that carries a major jail term, so be aware.
0 votes Thank Flag Link Wed Sep 22, 2010
This answer has nothing to do with the moral implications of your situation.

Before you foreclose, or give the property back via deed in lieu (which is just voluntary foreclosure), attempt to short sell it.
0 votes Thank Flag Link Wed Sep 22, 2010
Actually Fred, in Arizona we have what is called the Arizona Anti-Deficiency Statute, that protects homeowners from a deficiency judgement in most cases. If the loans were used as "purchase money" (i.e. no HELOC's), is 2.5 acres or less, and is at least occasionally occupied by the owner or another party, you are protected by the statute.
0 votes Thank Flag Link Wed Sep 22, 2010
Have you considered you other options? A foreclosure or deed-in-lieu will have significantly higher credit implications for you than a loan modification or short sale. My advice would be to look at all of your options before making a decision.
0 votes Thank Flag Link Wed Sep 22, 2010
Yes, the bank can get a deficiency judgement and attach the other home if they chose to.

You may want to consult an attorney who would negotiate with the bank and make sure that they do not come after you.
Web Reference:
0 votes Thank Flag Link Wed Sep 22, 2010
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