Foreclosure in Chandler>Question Details

Shawn Lee, Home Seller in Chandler, AZ

Is it true in AZ, the lender does not permit the mortgage holder to go after the owner for any deficiency?

Asked by Shawn Lee, Chandler, AZ Mon Oct 6, 2008

I read some questions on Gilbert have my similar situation, some one stated "The law in Arizona does not permit the mortgage holder to go after the owner for any deficiency (difference between what is owed and what they were able to recuperate). Is this true, my 2nd home in AZ, first in OR, I might have to let the bank foreclose my home in AZ, anyone knows the answer please? tks!

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4
Hi Shawn

The best answer for this might come from an attorney. I work with one that may do a free consultation with you to determine the best route for you to take.
Web Reference: http://www.McVinua.com
0 votes Thank Flag Link Tue Oct 7, 2008
Shawn,

Like the other agents said below the best idea is to consult with a real estate attorney. The law varies from state to state, and Arizona is an anti-deficiency state. So basically what you are saying it true - although like in everything else there are many exceptions - like on HELOCs (Home Equity Line of Credit), etc.z

Even if they do not come after you for the deficiency your credit will be completely ruined if you just let the property go into foreclosure - so, why risk it? Lenders are also actively trying to find loopholes and they will do anything they can do mitigate their losses.

In your case you will be better off trying to do a short-sale. If done properly it will be a settlement and the bank will agree in writing to accept less money to satisfy the debt. Just make sure that your agent is experienced and you get the correct language when doing the short sale.

Good luck!
0 votes Thank Flag Link Mon Oct 6, 2008
Shawn, The links I put in my answer give the applicable Arizona State law which you should look up and read. It appears to be fairly clear as to the exceptions to the law. I also read an article written by Combs Law Group where they thought it was possible that the short sale does not protect the property owner from the possibility of a deficiency claim. That is one reason to speak with a lawyer as well as an accountant. Here are the Arizona Revised Statutes that address the issue.

http://www.azleg.state.az.us/FormatDocument.asp?inDoc=/ars/3…
http://www.azleg.state.az.us/FormatDocument.asp?inDoc=/ars/3…
0 votes Thank Flag Link Mon Oct 6, 2008
Shawn, this is only true as long as the mortgage that was taken out was only purchase money and not a cash out refi or heloc. It also only applies to your first home. You should consult an attorney before making any decisions on what to do with your second home.
Web Reference: http://www.TeamKearney.com
0 votes Thank Flag Link Mon Oct 6, 2008
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