I might face foreclosure and was wondering if they can make me pay later on a first and second mortgage. The original company was Countrywide.

Asked by Tommy Young, Flagstaff, AZ Sun Apr 11, 2010

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Dusty Rhoton, Agent, Flagstaff, AZ
Thu Sep 2, 2010
Yes, they certainly can make you pay later...up to 6 years later as a matter of fact!

You can contact Bothands and they may assist you with avoiding the foreclosure and it's good to have someone on your side in these trying times!

I just took a class by a PHOENIX attorney and he was very helpful in assisting clients as well. Their instruction was very helpful and they were very knowledgeable.
1 vote
Bob Movin-On, , Hartford, CT
Mon Apr 12, 2010
Stop worrying about what will happen and start worrying about what you should be doing. Call your lender and start working to avoid foreclosure the lender does not want your home and there are a tons of options that they can offer. Being proactive will make a world of difference now and in a foreclosure hearing, judges are actually dismissing cases when banks do not work with homeowners that are proactive. Document everything you may need it.
The other 2 options you will have are short sale and deed-in-lieu-of foreclosure but they are both forms of foreclosure and foreclosure of any form is life changing.

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 your job, yes employers are checking credit records these days.

Your credit score will be reduced by 200-400 points, short sale 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
* Buying After a Foreclosure
The waiting period is 5 years up to 7 years.
* Buying After a Foreclosure with Extenuating Circumstances
The waiting period is 3 years up to 7 years.
* Buying After a Deed-in-Lieu of Foreclosure
The waiting period is 4 years up to 7 years.
* Buying After a Deed-in-Lieu of Foreclosure with Extenuating Circumstances
The waiting period is 2 years up to 7 years.
* Buying After a Short Sale
The waiting period was just upped from 2 to 3 years. However, if a seller does not have a 60-day late pay, that seller may immediately buy another home. It's a reason to stay current on your payments while the home is on the market as a short sale.
In addition to the waiting period, most loans require a minimum down payment of 10% and a minimum FICO score of 680. 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.
1 vote
Jeffrey Masi…, Agent, Scottsdale, AZ
Mon Apr 12, 2010
Dear Tommy:

Sorry to hear about your situation. Arizona is a non deficiency state. What does this mean?

To answer your question specifically regarding the deficiency on your mortgages that will be created with the foreclosure or short sale of your home, many homeowners/borrowers are not aware that Arizona is a "Non-Deficiency" State for short paid mortgages. This means that, unless there are specific issues in your loan agreement, which only your attorney can advise you on, the lender is prohibited by Arizona Statue 33-729 from pursuing a judgment against the borrower if the home has sold for a deficiency, an amount less than the mortgage balance due to a diminished value of the home (or secured property).

Specifically, Lenders are prohibited by Arizona Statute (33-729) from obtaining deficiency judgments in foreclosures where the land size is 2.5 acres or less and where the property was used as either a single one-family or single two-family dwelling. The actual language from the Arizona Statue follows:

Arizona Statute 33-729. Purchase money mortgage; limitation on liability

A. Except as provided in subsection B, if a mortgage is given to secure the payment of the balance of the purchase price, or to secure a loan to pay all or part of the purchase price, of a parcel of real property of two and one-half acres or less which is limited to and utilized for either a single one-family or single two-family dwelling, the lien of judgment in an action to foreclose such mortgage shall not extend to any other property of the judgment debtor, nor may general execution be issued against the judgment debtor to enforce such judgment, and if the proceeds of the mortgaged real property sold under special execution are insufficient to satisfy the judgment, the judgment may not otherwise be satisfied out of other property of the judgment debtor, notwithstanding any agreement to the contrary.

B. The balance due on a mortgage foreclosure judgment after sale of the mortgaged property shall
constitute a lien against other property of the judgment debtor, general execution may be issued thereon, and the judgment may be otherwise satisfied out of other property of the judgment debtor, if the court determines, after sale upon special execution and upon written application and such notice to the judgment debtor as the court may require, that the sale price was less than the amount of the judgment because of diminution in the value of such real property while such property was in the ownership, possession, or control of the judgment debtor because of voluntary waste committed or permitted by the judgment debtor, not to exceed the amount of diminution in value as determined by such court.

One option is to obtain a deed in lieu of foreclosure settlemen with your lenders. Another is selling your home in a short sale. t is my opinion that a professional short sale negotiator shoud represent you in working out a full release of the deficiency in writing to allow you to have "peace of mind" that the lender will not pursue payment for the deficiency. The lender is prohibited by law from doing so. However, if the borrower signs a separate note to he lender for the deficiency, that new note would govern the deficiency balance owed on the debt. A Realtor often does the negotiating for the borrower (and often are successful), but this is a complex issue. The bank's have professional "Loss Mitigators" that try to maximize the bank's return on a short sale to avoid an even larger loss in a foreclosure. You have the law behind to ask for a full release of the deficiency amount.

In my practice, I will bring in a negotiator that will be the advocate for my client in the short sale and will, if the home is sold at current market value, will obtain a deficiency release from the lender. My goal is to get the house sold at market value, the negotiator's job is to get the release for the borrower on the deficiency.

I hope this helps you.

Regards, Jeff

Jeff Masich, Realtor®
Arizona Homes and Land
HomeSmart Real Estate
0 votes
Paul Welden, Agent, Scottsdale, AZ
Sun Apr 11, 2010
Hi Tommy,

The answer is yes your mortgage companies may make you pay later after foreclosure, but it depends on they type of your mortgages and the reasons you obtained them. And there is a possibility that the IRS may force you to pay tax on the amount that your lenders mention on a 1099. These type of actions usually occur with a mortgage that was not used for your primary residence or was refinanced and used to cash out to buy "stuff" that was not used to improve the value/condition of the property.

Check with your mortgage companies and/or a real estate attorney.

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