Video 78: If you allow your house to go to foreclosure can the bank who had that loan come after you for any of their loses? Kevin Hardin of Thomson Conant Law Office in Phoenix answers that question for us. Would love to hear your thoughts, you can leave a comment or e-mail me Dean Ouellette.
{ 9 comments… read them below or add one }
Dean, this is great information. In my previous job I talked to a lot of people who made huge decisions based on erroneous information. The funny thing: the people who are protected by anti-deficiency laws in Arizona were the ones that were the most worried. The (insert unflattering term here)s who thought they could just walk away…were the ones that end up getting sued for deficiency balances.
Folks, if you are facing foreclosure…make sure you have the right information before you make foolish decisions.
.-= Bubba´s last blog ..Reproductive Rights =-.
Kevin is the best in the biz — thanks for taking the time to put this together.
More people need the *right* answer to these questions.
Justin
.-= Justin´s last blog ..Maybe =-.
Very misleading video. The key to Arizona anti-deficiency law is the property less than 2.5 acres and single family home. It the answer is yes than you are exempt from the anti-deficiency statute. This applies to non-judicial foreclosures, which 99% of foreclosures are. See ARS 33-814 (G)
James, I went back and rewatched, he specifically says for purchase money loan so if you have a HELOC or a second that was not used for the property (purchase money loan) you may not be covered.
The video is very confusing I agree. It seems like the information presented is seems confusing. Maybe it is just the wording.
Thank you for putting this together and reading my question.
I purchased a home in AZ in 2005 using a 1st mortgage for 162,000 and a Line of credit for 100,000. The total purchase price was 262,000. We needed both loans to purchase the home and both loans were processed through the same bank.
We were relocated by employer approximately 6 months later. We tried to sell the house for 6 months with no success. We ended up renting it out for a few years and paying the difference between the rent and the mortgage during that period.
Since then the house went up for short sale and 2 offers were left on the table due to the bank. The bank foreclosed in September 09. We received a 1099 from the first mortgage but the Credit Line continues to call us requesting that we pay them. They act like they have no idea that the house foreclosed.
We did make a large deposit into our credit line and a large withdrawal from the Credit Line a few years ago, in that order. We are unsure if they can sue us for the 100k default of the Credit Line.
What are your thoughts?
Kim, I am going to have Kevin try to answer this. There are some land mines here.
This is to address James. James, I appreciate your ability to seek out the statutes and reference them. You are missing one ARS 33-729 that references the purchase money question. Second, the statutes do not apply to the property, they apply to the mortgage that is being foreclosed on. Further, those two statutes included both Judicial and Non-Judicial of which there are both in this state. I believe anyone viewing this interview is going to see clearly I address the points that you pick up.
Again, to be clear. If a homeowner does not meet the elements represented by ARS 33-729 and 33-814(g) they may be at risk for deficiency.
(This response is in no way legal advice nor should it be construed as such and represents the opinion of this poster only. )
Kim,
It is possible that your actions with your credit line could be construed as a recharacterization of the HELOC. It would require review of the documentation and subsequent communication to that lender from qualified counsel. With the understanding that $375 and 10 sheets of paper anyone can sue you, it is best that you get proactive with working with them before they in fact file an action against you. Even if it is argued and determined that you have deficiency protection the only arena available to have that conversation is in court. These costs are too high to risk ignoring and engaging in long dialogue with a lender playing collections. You need to seek counsel and take a direct approach with them. There are very clear arguments to be made that you should be protected from deficiency. Just don’t wait till the point in time when you have to argue it out in front of a judge.