Foreclosure in Castle Rock>Question Details

Nancy Palatn…, Home Buyer in Peoria, AZ

can i walk away from a second mortgage?

Asked by Nancy Palatnik, Peoria, AZ Mon Jun 4, 2012

My credit union decreased my percentage on my first mortgage. Second is with B of A, cant even get them to call me back. I owe 56,000 on first, 80,000 on 2nd. The condos are going for under 50,000. Any ideas on what to do? I can afford the payments, but will probably never break even

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I am sorry you are having this problem with your lender. Second mortgage lenders usually don't put much effort on negotiating with homeowners. I guess in most cases they feel it is not worth their time.

In Arizona if the second mortgage was used as "purchase money" in most cases the lender cannot pursue a judgement after the foreclosure. Please note that I used the word "most". The only way to know for sure is to review your specific situation.

A short sale might be an option for you. However we won't know for sure until we talk.

Jose Dias
0 votes Thank Flag Link Tue Jun 5, 2012
Thank you for your answer. I will get back to you.
Flag Mon Jun 11, 2012
Call me on Thursday and I will talk to you about it. My wife is having surgery tomorrow.
Rod Ryan Associates.
0 votes Thank Flag Link Mon Jun 4, 2012
If your 2nd mortgage was taken at the same time you purchased your home, i.e., as part of an 80/10/10 or other similar financing split, then your loan is most likely considered "purchase money" or "original money" and most likely you will be protected under Arizona's anti-deficiency statute. That means, if your 2nd is considered original or purchase money, you can walk away and there should be no legal recourse by your lender.

HOWEVER, if your 2nd was taken out after you purchased your home, i.e., as part of an equity line of credit or other equity refi where you got money and used it for other purposes, that type of loan most likely is NOT considered purchase or original money and most likely the lender WILL be able to pursue you for the remaining balance if you were to walk away from the property.

Depending upon your circumstances, a short sale may be a good option for you to settle your 2nd and get out from under both loans. Short sales are complex and involve legal and tax considerations. If this is something you'd like to consider, give us a call at 480-302-9650. We are top 1% short sale agents at the #1 brokerage in the valley. We will take good care of you.
0 votes Thank Flag Link Mon Jun 4, 2012
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