Foreclosure in Chandler>Question Details

Shawn Lee, Home Seller in Chandler, AZ

My 2nd home in Chandler AZ, Can the bank come after me for the difference if I let the bank foreclose?

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

I bought a 2nd home in Chandler Az, put down 25%, got a 5 1/4 interest only loan, but now the house worth about $50k less than what I owe the bank, I am retired and have trouble makeing monthly mortgage, if I walk away and let the bank foreclose, am I still be responsible for the difference on what I owe and what the bank can sell the house for? My first home is in OR, and I do have some equity in my first home and little saving, at this point I don't care my credit score anymore! Please help!

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We just went through a B of A forecloser.I'm hoping to retire this year and use the retirement money to pay cash on a 40,50k home.Can B of A take this home from us?
0 votes Thank Flag Link Fri Aug 12, 2011
Dont walk away! Do a short sale as it is better for your credit and the amount you owe to the bank can be negotiated. In most cases, if the loan you took out on your second home was the original purchase money loan, then the bank cannot come after you for the difference. There could be tax consequences for you for the amount that is forgiven, but this will be less than if you let it go to foreclosure. Do not fret and do not be ashmed. Talk with a realtor about your options. We do them all the time and the bank pays the realtor fees.
Marian Marshall
Hunt Real Estate, ERA Lucas Division
mmarshall@huntrealestate.com
0 votes Thank Flag Link Sun Feb 21, 2010
I would rent out the property, then put it under a LLC and use availble assets to help cope. There are people in far worse shape then this scenrio. In this case I can see a bank coming after you even after a short sale or there is a foreclosure preceedings. The bank will rape you for everything.
0 votes Thank Flag Link Mon Feb 15, 2010
Hi Shawn - perhaps you might consider renting your home out and wait for the market to rebound? The AZ Rental market is still very strong. Typically you can get at least your mortgage payment in rent and save your credit score at the same time. Your credit score drives lots of things including the rates you pay for insurance!

If there is anything we can do to help, let us know. We get houses ready for renting and can also recommend some good property management companies.
0 votes Thank Flag Link Sat Nov 1, 2008
Arizona is one of several states with an anti deficiency law. Here are several links where this question was answered by various law firms when asked a similar question.

http://real-estate-law.justanswer.com/anti-deficiency/19b5a-…

http://www.plattwestby.com/CM/RealEstateLaw/RealEstate-Mortg…

http://www.keytlaw.com/azrealestate/foreclosurelaw.htm

http://www.boatescrump.com/CM/Articles/Short-Sales-Foreclosu…

http://www.garystickell.com/articles/arizona-antideficiency.htm

It is good advice to check with a lawyer and an accountant.

Jacqueline Drake CRS LTG PNM
Jacqueline Drake Realty
520-730-7452
0 votes Thank Flag Link Mon Oct 6, 2008
Shawn, I am sorry to hear that you are in this position. Unfortunately, there are a lot of people in your same situation. The first thing I would recommend is talking to your lender to see if you can negotiate something that will get you out from under this debt, and still satisfy them regarding your loan. There is no guarantee that the bank will just forgive the outstanding balance, and even if you do a short sale, you typically will be taxed on whatever the bank allowed you to write off (you said about $50k).

I would contact an attorney, and also speak with your tax accountant to determine what ramifications there may be, and then decide on the best resolution. It may cost you a little now, but if it saves you in the long run, it will be well worth it.
0 votes Thank Flag Link Mon Oct 6, 2008
This is something that you really need to look through your mortgage documents for, however, unless you have specifically negotiated for this you bank will most likely have the right to go after you to collect the difference. Whether they will or not really depends. The best strategy would probably be to simply call them and negotiate for them to take over the property and forgive your mortgage. However, this is not done automatically and you will need to initiate such dialog; I would suggest consulting with someone as to what is the best way for you to position your situation in order to achieve the desired outcome.
0 votes Thank Flag Link Mon Oct 6, 2008
Shawn Lee,

I have a home owner in your current situation, there are multiple options!

First we would need to contact the bank . From what we know for now the banks are forgiving the difference on the sale and what is owed on the loan. There can be problems however if homeowners used the loan for other purchases. However, I highly recommend seaking legal advice from an attorney.

Feel free to call me and we can discuss them at your convienience!

I have many references at your request!
0 votes Thank Flag Link Mon Oct 6, 2008
Maybe you can sell your house in OR and move to AZ. Good Luck
0 votes Thank Flag Link Mon Oct 6, 2008
I know someone in a similar situation.

They had a second home and the bank did agree to a short sale and forgive the balance. This was because there was no second mortgage on it and all of the money was purchase money.

If you would like us to see if a short sale might be realistic, please email me and I will call you. We have done quite a few short sales. We don't actively look for them, but if we think we can help someone, we will look at the situation.
0 votes Thank Flag Link Mon Oct 6, 2008
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