Foreclosure in Phoenix>Question Details

Carol Maher, Renter in 23060

If I own two properties and foreclose on my primary home in AZ, will the lender come after our assets on our second home in PA?

Asked by Carol Maher, 23060 Thu May 9, 2013

My husband lost his job in November 2012. We are living on his pension and moving to Virginia, where we will have part time employment. Our property in PA is being rented.

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Ann is completely right, getting advice online from people who are not authorized to practice law is a very bad idea. Also discuss with your attorney other potential secondary consequences that you may face. Those consequences may include a hike in the interest rate of your credit cards and other lines of credits, increase in you home and car insurance, higher loan rates on other loans (car, etc...) for many years to come, potential problems with job search on certain areas, not being able to buy another house for maybe 7 years or longer, etc... By the time you can buy another home prices may be quite higher than what you currently owe on your house. Additionally even in AZ, non-recourse state, many lenders will still try to take you to court where you will spend a lot of money to defend yourself, and you may win or you may still loose. Lenders have been very busy with foreclosures and have not been going much after the people who have defaulted, but many expect that to be the next wave - lenders taking people who defaulted to court. I don't say don't do it, but be very careful as the primary and secondary consequences may have a big impact.
0 votes Thank Flag Link Fri May 10, 2013
You might want to check with an attorney to get the correct answer.
0 votes Thank Flag Link Sat May 11, 2013
Carol, talk with a real estate attorney. No real estate agent is qualified to answer this question. Good luck.
0 votes Thank Flag Link Fri May 10, 2013
In AZ the Homestead Act protects you on your Primary home, however, your second home is not protected. Therefore, when the foreclosure happens on your Primary home, the second home needs to become your Primary. However, I don't know PA's homestead laws there. If it is rented then it will not be protected as it is a investment.
0 votes Thank Flag Link Fri May 10, 2013
As long as you used residential mortgages, the two properties are not tied together and the actions on one do not affect the status of the other.

However, The AZ lender may have the right to pursue you in court for a deficiency and judgement though this is generally not the case.

Per AZ law, if you have one mortgage on your property in AZ, it is on 2.5 acres or less and someone has occupied the house, then IF the lender uses a trustee sale process (used 97% of the time), they would not be able to come after you for a deficiency.
0 votes Thank Flag Link Fri May 10, 2013
I agree that speaking with a Real Estate Attorney will be your best advice on this one. There are several factors to consider when choosing to walk away/strategic default and a Real Estate Attorney can help guide you in the right direction. Most agents you speak with will obviously advise you to short sale your home instead of foreclosing because 1, it is typically better on your credit to have a short sale rather than foreclosure. 2, you may be eligible for HAFA money at closing (typically $3k and sometimes more). And 3, it is free for you to do and we still make a commission (selfish but true). But there are cases when a short sale is not the best option and that is where you need to protect yourself first. You can schedule an hour consult with an attorney for a small fee an then you will have peace of mind that you are making the right decision. If you need names of a couple good Real Estate Attorneys who will do this for you, please let me know.
0 votes Thank Flag Link Fri May 10, 2013
I agree with June but in general AZ is a non recourse state so you will likely just take a hit on your credit, but it's best to consult with a real estate attorney for legal advice
0 votes Thank Flag Link Thu May 9, 2013
There are way too many "it depends", and you need to consult with an attorney for this. Having a foreclosure can change and affect your life in many ways. If you can avoid foreclosure you should try to avoid it as much as possible.
0 votes Thank Flag Link Thu May 9, 2013
Carol

It is very possible that options exist that might work better for you than a foreclosure. We can explore the options with you and determine if any of them are worth further exploration.

Pretty easy for us to talk and discover the paths that might be better for you.
0 votes Thank Flag Link Thu May 9, 2013
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