Buying Arizona Real Estate » Short Sale mitigation http://buyingarizonarealestate.com/blog Everything real estate in Arizona, let's talk! Sat, 02 Oct 2010 15:29:52 +0000 en hourly 1 http://wordpress.org/?v=3.2.1 What do you do if the homeowner just doesn’t want to sell their negative equity home? – Thomson Law PLC http://buyingarizonarealestate.com/blog/2010/10/02/what-do-you-do-if-the-homeowner-just-doesn%e2%80%99t-want-to-sell-their-negative-equity-home-thomson-law-plc/ http://buyingarizonarealestate.com/blog/2010/10/02/what-do-you-do-if-the-homeowner-just-doesn%e2%80%99t-want-to-sell-their-negative-equity-home-thomson-law-plc/#comments Sat, 02 Oct 2010 15:29:51 +0000 Tony Pomykala http://buyingarizonarealestate.com/blog/?p=373 What do you do if the homeowner just doesn’t want to sell their negative equity home?

I imagine this is rare, but it has come up more than once when a homeowner is faced with the point today where they can no longer afford their home or it no longer makes sense to keep paying on [...] No related posts. Related posts brought to you by Yet Another Related Posts Plugin.]]>

What do you do if the homeowner just doesn’t want to sell their negative equity home?

I imagine this is rare, but it has come up more than once when a homeowner is faced with the point today where they can no longer afford their home or it no longer makes sense to keep paying on a negative equity home. They contact you, the Realtor and their Trusted Advisor, to explore options. For the most part those options have consisted of a Short Sale, trustee sale/foreclosure or loan modification exercise that ultimately fails to fix the problem. But, what if a homeowner could keep their home and owe no more than what its current resale value is? We are not talking principal reduction.

We are now late in the cycle of the mortgage crisis. First were the defaults of the sub-prime loans.  Then came the Alt A loans.  Now we are seeing the defaults of prime loans. With unemployment and underemployment high there is no relief in sight. At this point, these homeowners have tapped their savings and assets. The homeowner has run up their credit cards and now find themselves in dire financial straits. A short sale would be a great solution but they just do not want to or feel they cannot leave their property. Now there is a solution.

 The last resort, using the biggest hammer available, also has the greatest social stigma…Bankruptcy. At this point the homeowner feels sick but, we are not talking everyday consumer bankruptcy. Current bankruptcy laws allow, in a strategic fashion, for the stripping of any negative equity subordinate lien. In other words, releasing the second or third mortgage from the property so that it is unsecured. Next the bifurcation or splitting of the remaining first mortgage into a secured portion that is up to the value of the property and an unsecured portion that is above that value and lastly, the discharge of all unsecured debt including the unsecured portions of the mortgage. The result is that the homeowner may be relieved of the residue of this mortgage crisis. They now will own a home with what should be an affordable payment and owing only what the home is currently worth. They now have the ability to restore their credit or to get some time under their belt to re-establish their credit.

With HAMP a failure and the weight of short sales and the subsequent reductions in home values, tough solutions must be considered. Not every homeowner should consider the bankruptcy solution but, the option is available.

Thomson Law, PLC is a full service law firm and has added to its practices a Strategic Bankruptcy Practice focused on assisting homeowners in this situation. We believe that Bankruptcy should be the last option but should not be dismissed from the discussion of options. If you have a client that faces a point today that can no longer afford their mortgage and owes more than their home is worth please call Thomson Law today. We will sit down with them discuss their situation so that all of their legal rights and obligations are understood so that they can make good decisions for their family. 
 

For questions or comments about this or other articles please visit our
Doug Farnham (Central/Southern AZ)
(602)774-3753
 
Bob Verbic (Northern AZ)
(928)899-5765
 

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]]> http://buyingarizonarealestate.com/blog/2010/10/02/what-do-you-do-if-the-homeowner-just-doesn%e2%80%99t-want-to-sell-their-negative-equity-home-thomson-law-plc/feed/ 0 Loan Mods and Unicorns – Thomson Law PLC http://buyingarizonarealestate.com/blog/2010/10/02/loan-mods-and-unicorns-thomson-law-plc/ http://buyingarizonarealestate.com/blog/2010/10/02/loan-mods-and-unicorns-thomson-law-plc/#comments Sat, 02 Oct 2010 15:17:04 +0000 Tony Pomykala http://buyingarizonarealestate.com/blog/?p=369 Yet Another Related Posts Plugin.]]> The Loan Mod Myth 
 
What do Successful Loan Mods and Unicorns have in common? They are both mythical creations.  The difference is that Successful Loan Mods did exist at one time before HAMP, but now seem to have gone the way of the dinosaur.  Although there is that rare individual that receives a “permanent” modification, there are also rare individuals that win the lottery.  Even if a homeowner does get a “permanent” modification there is about a 50/50 chance it will result in an increase in their monthly payments. 
 
The MSA’s (Mortgage Servicing Agreements) and PSA’s (Pooling and  Servicing Agreements) between the lender (servicer) and investment groups, defines the number of loans that can be modified in a portfolio.  Typically this number is less than 5%, which is why the lenders allowed some modifications and then stopped.  There was no consideration that AAA rated securities would have the default rates occurring today and therefore there were no provisions to handle the mess we are in now.  Most of the residential loans were securitized into mortgage backed securities and pieces sold to junior tranche owners that get paid only after the senior tranche owner has been paid in full.  The effect of MBS distributions and any funds paid by Mortgage Insurers have created a situation in which investors are typically receiving 95% of market value from a foreclosure of a property.
 
You may notice that we have used quotes on the word “permanent”.  That is the term used by lenders as it is defined in HAMP.  The reality is that these loans in almost every modification are not permanent; meaning they are not fixed for balance of the term of the loan.  Rather, the loan is modified for 3 to 5 years and then adjusts or returns to an increased interest rate.  The 3 to 5 year period is just long enough to get the homeowner past the 2012 deadline for the Mortgage Debt Relief Act.  This means that the homeowner could miss their opportunity for an exit without tax consequences by accepting a modification. 
 
Another reason that the term “permanent” is illusory as it relates to loan mods is that many of the lenders will repeal the modification that was supposedly approved and granted.  This leaves the homeowner unable to pay off the accrued, unpaid payments, interest and fees to prevent a default and the home will usually be taken in a foreclosure.
 
Even if the homeowner is extremely lucky and gets a loan modification, that lowers their monthly payment, the issue of negative equity has not been addressed nor resolved.  Unless and until the homeowner receives a loan modification that includes a reduction of the principal balance so as to eliminate or appreciably reduce the negative equity, the primary problem faced by the homeowner will continue to exist.
 
The reason it is important to understand the fallacy of a loan mod is that homeowners spend months or in some cases even years playing this game with the lender and may miss their best opportunity for a clean exit from the property through short sale.  As a Realtor you may already be explaining this to homeowners, but we hoped that this information may help the homeowners you consult with to better understand their options.
 
Below are some other tools that can help a homeowner separate their emotions from what should be a strictly financial decision.
 
For questions or comments about this or other articles please visit our blog.  blog.MortgageMediationGroup.com
Doug Farnham (Central/Southern AZ)
(602)774-3753
 
Bob Verbic (Northern AZ)
(928)899-5765
 
 

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]]> http://buyingarizonarealestate.com/blog/2010/10/02/loan-mods-and-unicorns-thomson-law-plc/feed/ 0 The Upside of Short Sales http://buyingarizonarealestate.com/blog/2010/05/18/the-upside-of-short-sales/ http://buyingarizonarealestate.com/blog/2010/05/18/the-upside-of-short-sales/#comments Tue, 18 May 2010 20:01:22 +0000 Tony Pomykala http://buyingarizonarealestate.com/blog/?p=359 Yet Another Related Posts Plugin.]]> note: I received this in an email, and thought it was worth sharing:
For the last few months we have been writing articles to keep Realtors informed on issues relating to short sales.  We have had comments from some Realtors that they are afraid to handle short sales because of the risks involved.  But lets look at the future of short sales and the potential benefits:
  • First, from the Realtor’s perspective, there isn’t much of an option.  Since REOs and short sales account for 59% of homes sold in April, Realtors must be willing to take these listings.  That percentage is expected to increase since there is a huge shadow inventory of homes that will be hitting the market in the next few months as lenders have stopped their moratorium on foreclosures after the beginning of the year.  JPMorgan Chase Warns Investors about Strategic Defaults. 
  • Short sales becoming more socially and ethically acceptable to homeowners because of government programs like HAMP and HAFA that have legitimized this option.
  •  For homeowners that face a potential deficiency liability, a short sale gives another opportunity to get a release from that liability.  If the lender will not allow the language necessary for this release, a short sale may still reduce the amount of that liability as opposed to a trustee sale.
  • If a homeowner knows there will be tax implications as a result of exiting a home, that liability may be reduced through a short sale as opposed to trustee sale that will typically fetch a lower price.
  • More and more homeowners are deciding to exit their property compared to a year ago when most were trying to keep their home through a loan modification.  The reality that loan mods are a failed exercise and that lenders are not doing as promised has seemed to reach consumers.  Here are 8 reasons that loan mods fail.
  1.  
    1. Lenders make promises and later deny or retract loan mod offers.
    2. Temporary mods are often required but 3 to 5 months later they are told they do not qualify for a permanent mod.
    3. Lenders continually request updated financial records.  This is not just a nuisance but is a method used by lenders to extract further payments from the homeowner and try to determine available assets for lawsuits.
    4. After following the lender’s instructions to make reduced payments as part of a temporary mod, when the lender later rejects that loan mod that borrower is now in default and the lender can file for trustee sale.
    5. Most loan mods are only a forbearance under which the missed payments, penalties and interest are added as a balloon to the end of the loan, further increasing the homeowner’s negative equity.
    6. Failure to disclose the investor and their NPV (Net Present Value) calculations to the homeowner make the decisions of the banks seem unreasonable and counter to financial logic.
    7. “Permanent” mods are not typically permanent.  In most cases the lower interest rates are only fixed for 3 to 5 years.
    8. If a borrower decides to exit the property after receiving a permanent loan mod, it may be too late to receive the benefit of the Mortgage Debt Forgiveness Act (through 2012) creating a tax obligation that the borrower may not have faced, if they made their decision earlier.
Based on the results of loan mods to date, it seems a reasonable assumption that the whole process is not to help the homeowner, but to keep the homeowner making some kind of payment.
 
In the last HAMP report released in December of 2009, it is easy to see why homeowners need alternatives to loan modifications.  In AZ only 4,137 homeowners have received a permanent modification.  Nationally, out of 3.5 million homeowners that should have qualified, only about 66,000 received permanent mods and about half of those homeowners had their monthly payments increase.
 
Here are some tools that may be able to help homeowners decide whether or not a short sale is their best option.
Last chance to register for the free “Short Sales Exposed – Insiders Tell All Seminar“ on May 19th, 9:00AM to 12:00PM at the Scottsdale Center for the Performing Arts.  Click here for more info or to register.
 

Doug Farnham (Central/Southern AZ)
(602)774-3753
 
Bob Verbic (Northern AZ)
(928)899-5765
 

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]]> http://buyingarizonarealestate.com/blog/2010/05/18/the-upside-of-short-sales/feed/ 0 New Fannie Mae Waiting Periods for Sellers of Distressed Homes http://buyingarizonarealestate.com/blog/2010/05/10/new-fannie-mae-waiting-periods-for-sellers-of-distressed-homes/ http://buyingarizonarealestate.com/blog/2010/05/10/new-fannie-mae-waiting-periods-for-sellers-of-distressed-homes/#comments Mon, 10 May 2010 18:31:06 +0000 RebeccaRoberts http://buyingarizonarealestate.com/blog/?p=353   from Rebecca Roberts, Mortgage Banker with The Lending Company, Inc.

Advising Short Sale and Deed-in-Lieu Clients 2010

 If you are working with a client who has had a short sale or a deed-in-lieu in their past…or you are listing a home and your sellers may have the same issues…Fannie announced new waiting periods, as of July 1, [...] No related posts. Related posts brought to you by Yet Another Related Posts Plugin.]]>   from Rebecca Roberts, Mortgage Banker with The Lending Company, Inc.

Advising Short Sale and Deed-in-Lieu Clients 2010

 If you are working with a client who has had a short sale or a deed-in-lieu in their past…or you are listing a home and your sellers may have the same issues…Fannie announced new waiting periods, as of July 1, 2010, before being eligible for another loan.  The waiting period is defined as “from the date of the pre-foreclosure to the date of application”.

  • Fannie defines ALL Pre – foreclosure events as any one of the following:
  • Deed-in-Lieu
  • Preforeclosure Sale
  • Short Sale
                                                                                     
  • Full Foreclosure retains a 5 yr waiting period

 New Waiting Periods Effective July 1, 2010

 Preforeclosure Event

Current Waiting Period Requirements

New Waiting Period Requirements
Deed-in-Lieu of Foreclosure 4 years

Additional requirements apply after 4 years up to 7 years

  

  • 2 years – 80% maximum LTV ratios
  • 4 years – 90% maximum LTV ratios
  • 7 years – Standard LTV ratios

 
Preforeclosure Sale 2 years
Short Sale No specific policy currently exists

For extenuating circumstances, for all 3 event scenarios, it’s a 2-year waiting time and 90% LTV.

Rebecca Roberts    Mortgage Banker
The Lending Company, Inc.
6910 E. Chauncey Ln. Ste. 220 Phoenix, AZ 85054
Phone: 602-791-6262                Fax: 866-559-9097
License: NMLS #231543 – BK0909441
rroberts@thelendingco.com
www.thelendingco.com
                                                         

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]]> http://buyingarizonarealestate.com/blog/2010/05/10/new-fannie-mae-waiting-periods-for-sellers-of-distressed-homes/feed/ 0 Loss Mitigation Programs http://buyingarizonarealestate.com/blog/2010/02/10/loss-mitigation-programs/ http://buyingarizonarealestate.com/blog/2010/02/10/loss-mitigation-programs/#comments Wed, 10 Feb 2010 16:35:59 +0000 Tony Pomykala http://buyingarizonarealestate.com/blog/?p=282 An interesting email I received from Stan Van Dyk of Cash Funding Options:

Hi All: Today, I’m going to show you how the government’s moratoriums and loss mitigation programs have affected foreclosures and shadow inventory.  

Shadow inventory is made up of all the properties that are in foreclosure or headed toward foreclosure that haven’t hit the market yet. There are 7 [...] No related posts. Related posts brought to you by Yet Another Related Posts Plugin.]]> An interesting email I received from Stan Van Dyk of Cash Funding Options:

Hi All:
Today, I’m going to show you how the government’s
moratoriums and loss mitigation programs have affected
foreclosures and shadow inventory.  

Shadow inventory is made up of all the properties that are
in foreclosure or headed toward foreclosure that haven’t
hit the market yet. There are 7 million homes in this shadow
inventory category.  What the government isn’t telling you
is that their moratoriums and loss mitigation programs
created a huge surge of foreclosures that are about to pop.

Their effort to decrease foreclosures has backfired.

According to the National Association of Realtors, there
were 3.6 Million unsold homes in September. You think there
are a lot of homes on the market now? There are 7 Million
more coming that the government has created in this shadow
foreclosure inventory. That’s 2 times the amount of homes
that are currently on the market now!

The government’s Making Home Affordable (MHA) modification
program and FHA’s Hope for Homeowners refinance program DO
NOT WORK for borrowers that are too wealthy or owe too much
on their homes. The number of foreclosures for high end and
luxury homes in increasing and there are a ton of luxury
homes in this shadow inventory.

So what does all of this mean to you as a real estate
investor?

Opportunity, a lot of opportunity to help high-end
homeowners by offering them a short sale while making a
killing in the process.

So when can we expect to see the surge in foreclosures from
this shadow inventory?

We are in the first phase of shadow inventory right now and
it will continue into 2010. The second wave will start in
2010 and will continue into 2011 because the national
foreclosure moratoriums ended in March and the government
intensified its HOPE NOW Alliance program as well as its
Home Affordable Modification Program (HAMP). These programs
were released in the first week of March but the problem
was that the servicers and lenders did not receive training
until the middle of June. Then, the programs had to be
updated because they weren’t effective and they became more
complicated to implement effectively.

This created a huge amount of people that have not paid
their mortgage and their houses have not been taken back by
the lenders yet. Basically the government only delayed the
inevitable foreclosure process but they made it worse
because all of the homes will be entering foreclosure at
the same time and with more debt owed on the mortgages.  

This is the ultimate short sale environment. These homes
are ripe for the picking. Many of these homeowners have thrown
their hands up and have vacated the houses. These vacant
houses are gold for you as a real estate investor.

The third phase of shadow inventory will be borrowers that
have exhausted their options on long term government
sponsored payment plans, forbearances, and failed
modifications. These will show up in 2011 and continue into
2012 as their foreclosure timelines were delayed or reset
by the latest HAMP efforts.

As you can see, the biggest mass of foreclosures hasn’t
even hit us yet!

Call us to see how you can help and profit from the the credit and housing crisis.

Thank you,
 
Stan Van Dyk  – Managing Partner
Cash Funding Options
4625 S Lakeshore Dr Tempe, AZ 85282
888-341-3802 Toll Free    602-314-1025 Office   480-516-4364 Cell
480-240-1316 e-Fax
Stan@CashFundingOptions.com  http://www.cashfundingoptions.com/

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]]> http://buyingarizonarealestate.com/blog/2010/02/10/loss-mitigation-programs/feed/ 0 The Phoenix Real Estate Weekly 12/31/09 http://buyingarizonarealestate.com/blog/2009/12/31/the-phoenix-real-estate-weekly-123109/ http://buyingarizonarealestate.com/blog/2009/12/31/the-phoenix-real-estate-weekly-123109/#comments Thu, 31 Dec 2009 16:29:08 +0000 Barb Savoy http://buyingarizonarealestate.com/blog/2009/12/31/the-phoenix-real-estate-weekly-123109/ Courtesy of Barb Savoy-Pacella, ABR, CHMS Director of Business Development Keller Williams Arizona Realty

Happy New Year!

To view homes for sale, or for additional information about the Phoenix, Arizona market, visit www.PacellaGroup.com.

What a difference one year makes!

As we reflect on 2009 and anticipate 2010 here are some things we know:

* 94% of all properties that sold in 2009 [...] No related posts. Related posts brought to you by Yet Another Related Posts Plugin.]]> Courtesy of Barb Savoy-Pacella, ABR, CHMS
Director of Business Development
Keller Williams Arizona Realty

Happy New Year!

To view homes for sale, or for additional information about the Phoenix, Arizona market, visit www.PacellaGroup.com.

What a difference one year makes!

As we reflect on 2009 and anticipate 2010 here are some things we know:

* 94% of all properties that sold in 2009 were listed under $400,000.
* In the final weeks of 2009, we began to see the average sales price per square foot increase slightly.
* Valley-wide there is a three month supply of inventory for properties listed under $100,000
* Valley-wide there is a five month supply of inventory for properties listed under between $100,000-$300,000.
* Leading into 2009 short sales represented 1% of properties selling in any given month. By the close of 2009, that figure has risen to 20%.
* Alt-A 5 year ARM loans started re-setting in the fourth quarter of 2009.

What does the 2009 data lead us to anticipate for 2010?

* There is a perception of value and greater affordability in the lower price ranges.
* Lenders are being incentivized to reduce the time required for the short sale process, and we are likely to see substantial short sale inventory.
* The average price per square foot has been creeping up, but that could be unsustainable if Alt-A borrowers begin defaulting on loans.
* Lenders are targeting borrowers with Alt-A loans that are re-setting to counsel them regarding short sale, rather than foreclosure.

Current Conditions in the Phoenix Market:

* There are 26,637 single family detached listings currently active in MLS today. That is an increase of 99 listings over last week.
* Total listings (including condos, patio homes, town homes and lofts) currently active in MLS 34,218.

Wishing you a safe and prosperous New Year!

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]]> http://buyingarizonarealestate.com/blog/2009/12/31/the-phoenix-real-estate-weekly-123109/feed/ 0 The Phoenix Real Estate Weekly 11/27/09 http://buyingarizonarealestate.com/blog/2009/11/27/the-phoenix-real-estate-weekly-112709/ http://buyingarizonarealestate.com/blog/2009/11/27/the-phoenix-real-estate-weekly-112709/#comments Fri, 27 Nov 2009 17:42:49 +0000 Barb Savoy http://buyingarizonarealestate.com/blog/2009/11/27/the-phoenix-real-estate-weekly-112709/ Courtesy of Barb Savoy-Pacella, ABR, CNRS, CHMS Keller Williams Arizona Realty

To view homes for sale, or for additional information visit us at www.PacellaGroup.com

If we continue on our current trend, it could be very good news for the Phoenix market.

According to the Cromford Report, which analyzes Phoenix real estate data, sales volumes are 63% higher than the [...] No related posts. Related posts brought to you by Yet Another Related Posts Plugin.]]> Courtesy of Barb Savoy-Pacella, ABR, CNRS, CHMS
Keller Williams Arizona Realty

To view homes for sale, or for additional information visit us at www.PacellaGroup.com

If we continue on our current trend, it could be very good news for the Phoenix market.

According to the Cromford Report, which analyzes Phoenix real estate data, sales volumes are 63% higher than the same time last year, and active listings are reaching their seasonal peak which is 29% below 2008 levels. Additionally, foreclosure activity has declined in November and the totals for the month will probably be around 4,000 trustee sales (down 16% from October) and 7,000 notices (down 11% from October).
Overall, the majority of the Valley is in a seller’s market with under 4 months supply of inventory. The exceptions of course being Scottsdale (8.8 months), Fountain Hills (9.3 months), and Paradise Valley (17.6 months).

Current Conditions in the Phoenix Market:

* There are 26,101 active, single family detached, listings currently in MLS. That is a decrease of 49 listings versus last week.

* There are 33,648 total listings (including condos, patio homes, and town homes) on the market this week.

The trend toward lender approval of short sales seems to be continuing, which is impacting the total of pending sales at 11,511.

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]]> http://buyingarizonarealestate.com/blog/2009/11/27/the-phoenix-real-estate-weekly-112709/feed/ 0 Arizona Anti-Deficiency bill, SB-1271 http://buyingarizonarealestate.com/blog/2009/08/10/arizona-anti-deficiency-bill-sb-1271/ http://buyingarizonarealestate.com/blog/2009/08/10/arizona-anti-deficiency-bill-sb-1271/#comments Mon, 10 Aug 2009 20:22:08 +0000 Tim L. Greenfield http://buyingarizonarealestate.com/blog/?p=141 Courtesy of  Tim L. Greenfield, Associate Broker, ABR Coldwell-Banker Residential Brokerage  Scottsdale Arizona

8-10-09

 Please visit my website www.GreatScottsdaleLiving.com  for updates.

 There has been lots of noise about SR-1271 of late. It is scheduled to become effective the end of September. This is a new law intended to assist small community banks that did not receive TARP funds. See [...] No related posts. Related posts brought to you by Yet Another Related Posts Plugin.]]> Courtesy of  Tim L. Greenfield, Associate Broker, ABR
Coldwell-Banker Residential Brokerage  Scottsdale Arizona

8-10-09

 Please visit my website www.GreatScottsdaleLiving.com  for updates.

 There has been lots of noise about SR-1271 of late. It is scheduled to become effective the end of September. This is a new law intended to assist small community banks that did not receive TARP funds. See Tom Farley’s (CEO of AAR) comments below  

Anti-Deficiency Law Update:
“SB 1271 has been getting a lot of press lately as it will have serious and unintended consequences for many real estate owners facing foreclosure in Arizona. In light of this the original sponsor of the bill, Senator Steve Pierce, has asked the legislature and the Governor for an immediate repeal of the law which is slated to go into effect at the end of September. The state’s original anti-deficiency language has been inserted into two budget bills (HB 2008 and SB 1024) currently being debated by the legislature which would have the effect on nullifying the passage of SB 1271. HB 2008 has quickly passed the Arizona House of Representatives. SB 1024 is awaiting final vote which could happen August 8th or on the 10th. If for some reason, the Senate Bill fails on final vote, we will immediately focus on our next effort to repeal the law. The banking lobby and at least one member of the legislature are pushing for an amendment to SB 1271, instead of repeal, that would allow it to still apply retroactively to loans already in existence. We have been advised that this action would ultimately be unconstitutional. Stay tuned for more updates on our efforts to repeal SB 1271 through the bills cited above. 

 Backgrounder: 

SB 1271 – Serious Changes to Arizona’s Anti-Deficiency Statute

SB 1271 was sponsored by Senator Sylvia Allen, a REALTOR® from the White Mountains area of our state. The legislation started out in January as a bill dealing with jail districts and property tax limits. In June a strike-everything amendment gutted the original bill and changed its direction entirely. The Arizona Bankers Association argued successfully that the changes provided in the legislation were necessary because abuses in the current law were costing Arizona-based banks millions in losses. There was significant sympathy for the Arizona community banks in making the changes provided by this legislation. In other words, the legislators found it very easy to hold property investors liable for their debts while arguing that homeowners would still retain their deficiency protection if they lived in the home for six consecutive months. The legislation sailed out of the Senate by a unanimous vote but just barely received enough votes to pass the Arizona House of Representatives. The Governor signed the bill on the last day to sign or veto the legislation. 

The current law – Arizona Revised Statutes (A.R.S.) § 33-814 currently states that within 90 days after the date of sale of a trust property under a trust deed, a legal action may be brought to recover a deficiency judgment against the borrower (trustor) who has now had their property foreclosed. The deficiency judgment must be for an amount equal to the sum of the total amount owed as of the date of the sale either by the fair market value of the trust property as determined by the court or the sale price at the trustee’s sale, whichever is higher. The current law prohibits a lender from seeking a deficiency judgment against the trustor (foreclosed property owner) if the trust property is 2.5 acres or less and is used as a single one-family or single two-family dwelling.

Stay tuned to see how this plays out at www.GreatScottsdaleLiving.com. 

TLG

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