Avoid foreclosure but make sure the lender cannot pursue you later
There could be nothing worse than losing your house. But, sometimes it’s the only options to get out of a financial mess. Ideally, it allows homeowners to move on to a new place that are not over-leveraged, and pays the bank at least some of what they are owed.
If you’re behind on payments, you might have reached out or be searching for a Phoenix short sale realtor? If you have, you’re probably wondering if you’ll be liable for the deficiency balance after the short sale or foreclosure. It happens in case your realtor did not make sure the approval letter strictly stated the bank would waive their ability to pursue you later for any money owed. It can also happen if the loan or home does not fit the Anti-deficiency statues.
Most borrowers are not aware of the number people having suffered the same consequences, but it is the reality of thousands of Sellers. But, many may or may not have known if they would owe money later when they became financially stable. Unfortunately, it is not a top consideration when borrowers are just trying to get rid of a toxic financial situation.
The period of economic crunch witnessed major job losses, unemployment, and transfers forcing house owners to go default on their mortgage payments. Hundreds of thousands of people lost their home to foreclosure. But, according to the law, if the house owner had no negotiations with the lender before the short sale/foreclosure, the lender may still hold them for the deficiency balance. The state laws may vary from one state to another, but the remainder may still be too much for the distressed property owners.
Short Sale Arizona: How Can I find out if the bank can still pursue me after the short sale or foreclosure?
There are many factors which may decide whether the bank can come after you after the short sale, or not for the deficiency balance. It is best to discuss these factors with Phoenix short sale realtor and your lawyer before the auction. Some of these factors are:
• The type of loans you had on the property
• Any additional mortgage or second liens on the property
• If the property meets the Anti-deficiency outline for exclusion
If you are looking to pursue a short sale Arizona and need legal council, we will reimburse your attorney consultation fee upon successful close of escrow.
The US Foreclosure Network states that lenders/banks can pursue the house owner for the deficiency balance in as many as 30 states. Some of these states include Texas, New York, and Florida. On the contrary, there are some major states where the lender may not pursue you like California. The lenders may only follow you if the mortgage loan was refinanced and the laws may allow lender to pursue you. Arizona has some very unique anti-deficiency statues that, although you do not need to memorize them, you need to be aware of them if you’re facing foreclosure.
RELATED VIDEO: Anti-Deficiency Law and your Arizona Short Sale
In short, before you decide to short sale, or if you can delay the foreclosure, it is must to work with someone who understands the pitfalls of foreclosure and short sales in detail. If you get your short sale approved, it is a must to read and understand the approval letter and the conditions the Lender outlines, including any deficiency. It is one thing to get a short sale done, it’s another thing to make sure that closing the short sale is actually in your best interest…liability wise and financially.
This article is of opinion and not to be taken as legal or tax advice. We will gladly refer you to a qualified attorney for a confidential review, but none of the information contained herein should be used to make any decisions for your personal situation.
Tracy (G+) is an Arizona Short Sale Realtor, Investor, Rehabber, and Foreclosure Expert.
She also is an avid blogger, vlogger, contributor to Real Estate Magazines, and hosts Real Estate Rescue, a radio show dedicated to the distressed property market.