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Deficiency Judgment in Arizona

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Question:  We have a deficiency judgement against us for a home we were building in Arizona. Can the bank garnish my wages and/or lien the house in which we reside. We do not want to file BK?

Answer:  – First off let’s clear up some misunderstanding on your deficiency judgment in Arizona. Arizona is actually a non deficiency state, however there are rules in order for the homeowner to apply the anti deficiency law. First is has to be a residential property on less than 2 1/2 acres. If you only have a first mortgage, chances are you may qualify. It’s the 2nd or HELOC that gives homeowners in Arizona all the problems. Usually a deficiency judgment in Arizona happens because of a HELOC since it is taken out after the 1st mortgage and it’s not a purchase money loan.

With this in mind, you need to determine what your situation is and if they have grounds to file a judgment against you based on what you’ve just read. If they can file a judgment against you than it’s best to try and work something out with the lender if you can. Usually you can make them an offer to pay it off in full or work out a payment plan. A lot of times homeowners don’t have a choice but to file bankruptcy because the lender simply won’t work with them and they can’t afford the payments or lump sum. But definitely try to settle with them if you can. If you do nothing, yes, they can garnish wages if it gets to that point.

Arizona rental foreclosed on

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Question:  I live in California but owned a rental in Arizona that was foreclosed on. I had an equity line of credit on that home when it was foreclosed on. I believe I owed about $90K on that equity line of credit. Can they now come after me for the money? Is my only recourse bankruptcy?

 

Answer:

Well all you can do it wait and see what the bank sends you in the mail. They will either send you a 1099 or they will send you a judgment for the $90k. Now, I know that Arizona is a anti-deficiency state, however, there are 2 statutes that apply to foreclosure and in a lot of cases, homes that have 2nd mortgages do not fall into the category of either of these statutes because the money was not used in the purchase of a home. You might be able to work out a settlement with the bank especially if you threaten them with the bankruptcy card. A good attorney can help you with that. Worst case, most people just bk.

I wish you would have found us earlier… you could settle your note as well and save a lot of headache. Good Luck

Summons in Arizona for a piece of property that was foreclosed on…now suing for deficient amount.

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Question: Just got summons in Arizona for a piece of property that was foreclosed on and sold. The bank is suing us for the deficiency amount. Is there any way to fight this? We think we may have a defense because there was no public report for this property at time of sale.

Answer: – Yes, the bank does have the right to go after the homeowner for the deficient amount after the home has been through foreclosure.

I had an investment property go into foreclosure 9/1/09 in Arizona, Maricopa county.

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Question: I had an investment property go into foreclosure 9/1/09 in Arizona, Maricopa county. The home has a first mortgage for 160k and purchase money HELOC for 20K. Neither loan was ever touched after the purchase. On Aug 17, 2009 Countrywide sent me a letter informing me the HELOC will have a new servicer Real Time Resolutions, INC.
On 9/5/09, I received what seems to be an attempt to collect from Real Time Resolutions, INC. it states I have, “30 days to dispute the validity of this debt or any portion thereof, this office will assume this debt is valid.” The payoff they are requesting is $ 21,193.74 which I am assuming is the HELOC plus fees.

Is this allowed or legal, can a new servicer attempt to collect on the Heloc since the home has already gone into foreclosure? Should I meet with a lawyer or am I okay ignoring these letters?

Please advise and thanks for your time,

Aaliyah, Gilroy CA

Answer: -This is normal protical and yes since your loan was “sold” to a new servicer, they can try to collect the debt. So they will send you certified letters in the mail every month telling you how much you owe and that it’s an attemt to collect the debt. You don’t need to respond unless you are disputing the action and I’m sure they will try to call you every week and threaten you to pay…or else. By sending these letters, it gives them the right to proceed with foreclosure if they want. However, we all know they won’t unless there is substancial equity in the property. More than likely they will just write it off as a loss and 1099 you for the difference.

Arizonas (anti-deficiency state) law when foreclosed on

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Question: I have a home in Arizona [anti-deficiency state] that was purchased with an 80/20 loan. I have never refinanced the loans. We were in the process of negotiating a short sale, got approval from the first [with Country Wide] and they agreed to pay the 2nd [Citi] $3k, when we went back to Citi to get final approval we discovered that they charged off the 2nd and sold the loan to a subsidiary which has now turned it over to an attorney that claims they are going to file a deficiency judgement against me and collect the debt. They claim that since it was a second mortgage and it was charged off that they can do this. It was a second but it was a “purchase money” loan. Can they come after me for the deficiency?