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Arizona - Forclosure vs Deed in lieu

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  • Arizona - Forclosure vs Deed in lieu

    We have gotten in over our heads and our quickly becoming house poor with the house we own. The house is worth about what we paid for it, but with the market we would lose and we couldn't afford to pay the realtor's fees. We have added to the house for the better. . Neither of us can make the payments alone. What is the best way to handle this...foreclose or deed in lieu? Do we need to see a bankruptcy lawyer or a real estate lawyer? We are not behind on payments as of yet...but are struggling. Any suggestions would be great. How do we avoid paying the lender back for losses? Or so it won't end up on our income tax?
    Last edited by hiptiger; 10-15-2007, 03:12 PM. Reason: Too long

  • #2
    Originally posted by hiptiger View Post
    My husband and I recently purchased a house in June 07. We have gotten in over our heads and our quickly becoming house poor. The house is worth about what we paid for it, but with the market we would lose and we couldn't afford to pay the realtor's fees. We went in with zero down. We have added to the house for the better. We just can't afford it and money issues having us talking divorce. Neither of us can make the payments alone. What is the best way to handle this...foreclose or deed in lieu? Do we see a bankruptcy lawyer or a real estate lawyer. We are not behind on payments as of yet...but are struggling. Any suggestions would be great. How do we avoid paying the lender back for losses? Or so it won't end up on our income tax? We don't qualify for the chapter 7 and the chapter 13 hurts us. Any ideas?

    Thanks,

    Hiptiger
    Not all lenders will accept a deed in lieu. Have you spoken to your lender? The only way to avoid repaying the deficiency balance is through BK.
    Please no private messages about your situation.

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    • #3
      What is PMs? BK is hsort for bankruptcy? Yes I have talked to the lender, they said to write them a letter of hardship and explain why. But we know we will lose on the house and won't be able to pay off he difference. Just not sure what type of lawyer we should be consulting?

      Thanks

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      • #4
        Originally posted by hiptiger View Post
        What is PMs? BK is hsort for bankruptcy? Yes I have talked to the lender, they said to write them a letter of hardship and explain why. But we know we will lose on the house and won't be able to pay off he difference. Just not sure what type of lawyer we should be consulting?

        Thanks
        PMs is private messages. That isn't directed at you. It is a part of my signature line. Yes, BK is bankruptcy. You need to speak to a BK attorney.
        Please no private messages about your situation.

        Comment


        • #5
          The lender will not work anything out if you have not missed a payment. If you want to sell your home you should have it listed with a Realtor who specializes in short sales. A short sale is when your lender agrees to accept a payoff less than what you owe on your mortgage. Your lender may be willing to pay at the least your Realtors commission if they were aware of your situation. Unfortuntely you may have to miss a payment to even get their attention. But I would definately call them and let them know your situation and see if they are willing to do a short sale on your home. Deeding in lieu is a LAST resort for the bank. Usually the lender will waive any right to seek a deficiency judgment against you for attempting to sell the home and then they will accept deeding in-lieu of foreclosure. They do not want your home to go to foreclosure either, because it cost a lot of money for a bank to hold onto a non-performing asset, on the average around $30,000

          www.freewebs.com/rsdrealestateservices

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          • #6
            Misinformed...

            Originally posted by moburkes View Post
            Not all lenders will accept a deed in lieu. Have you spoken to your lender? The only way to avoid repaying the deficiency balance is through BK.
            That is simply incorrect. Arizona is an anti-deficiency state. Of course the law does not apply in all cases. I suggest that you speak with a lawyer that specializes in real estate. I have attached the applicable section below:

            33-814. Action to recover balance after sale or foreclosure on property under trust deed

            A. Except as provided in subsections F and G of this section, within ninety days after the date of sale of trust property under a trust deed pursuant to section 33-807, an action may be maintained to recover a deficiency judgment against any person directly, indirectly or contingently liable on the contract for which the trust deed was given as security including any guarantor of or surety for the contract and any partner of a trustor or other obligor which is a partnership. In any such action against such a person, the deficiency judgment shall be for an amount equal to the sum of the total amount owed the beneficiary as of the date of the sale, as determined by the court less the fair market value of the trust property on the date of the sale as determined by the court or the sale price at the trustee's sale, whichever is higher. A written application for determination of the fair market value of the real property may be filed by a judgment debtor with the court in the action for a deficiency judgment or in any other action on the contract which has been maintained. Notice of the filing of an application and the hearing shall be given to all parties to the action. The fair market value shall be determined by the court at a priority hearing upon such evidence as the court may allow. The court shall issue an order crediting the amount due on the judgment with the greater of the sales price or the fair market value of the real property. "Fair market value" shall mean the most probable price, as of the date of the execution sale, in cash, or in terms equivalent to cash, or in other precisely revealed terms, after deduction of prior liens and encumbrances with interest to the date of sale, for which the real property or interest therein would sell after reasonable exposure in the market under conditions requisite to fair sale, with the buyer and seller each acting prudently, knowledgeably and for self-interest, and assuming that neither is under duress. Any deficiency judgment recovered shall include interest on the amount of the deficiency from the date of the sale at the rate provided in the deed of trust or in any of the contracts evidencing the debt, together with any costs and disbursements of the action.

            B. If a trustee's sale is a sale of less than all of the trust property or is a sale pursuant to one of two or more trust deeds securing the same obligation, the ninety day time limitations of subsection A of this section shall begin on either the date of the trustee's sale of the last of the trust property to be sold or the date of sale under the last trust deed securing the obligation, whichever occurs last.

            C. The obligation of a person who is not a trustor to pay, satisfy or purchase all or a part of the balance due on a contract secured by a trust deed may be enforced, if the person has so agreed, in an action regardless of whether a trustee's sale is held. If, however, a trustee's sale is held, the liability of a person who is not a trustor for the deficiency is determined pursuant to subsection A of this section and any judgment for the deficiency against the person shall be reduced in accordance with subsection A of this section. If any such action is commenced after a trustee's sale has been held, it is subject, in addition, to the ninety day time limitations of subsections A and B of this section.

            D. If no action is maintained for a deficiency judgment within the time period prescribed in subsections A and B of this section, the proceeds of the sale, regardless of amount, shall be deemed to be in full satisfaction of the obligation and no right to recover a deficiency in any action shall exist.

            E. Except as provided in subsection F of this section, the provisions of this chapter do not preclude a beneficiary from foreclosing a deed of trust in the same manner as a real property mortgage. In an action for the foreclosure of a deed of trust as a real property mortgage the provisions of chapter 6, article 2 of this title are applicable.

            F. A deed of trust may, by express language, validly prohibit the recovery of any balance due after trust property is sold pursuant to the trustee's power of sale, or the trust deed is foreclosed in the manner provided by law for the foreclosure of mortgages on real property.

            G. If trust property of two and one-half acres or less which is limited to and utilized for either a single one-family or a single two-family dwelling is sold pursuant to the trustee's power of sale, no action may be maintained to recover any difference between the amount obtained by sale and the amount of the indebtedness and any interest, costs and expenses.

            Comment


            • #7
              Short sale it... or it will go to Trustee Sales

              Have you considered a short sale? You may want to have a gander at some investment groups or real estate holding companies that would be willing to purchase your home. Is there some structural integrity issues or anything that can be fixed that would bring more value to your home? If not, I might just let it go to (deleted).
              Last edited by cbg; 12-04-2009, 08:41 AM.

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              • #8
                This thread is coming up on two years old.
                The above answer, whatever it is, assumes that no legally binding and enforceable contract or CBA says otherwise. If it does, then the terms of the contract or CBA apply.

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