Arizona - Florclosed on 3 years ago

[pcazares]

Hello all

I lost my home about 3 years ago, foreclosure

Here's my situation. At the time I went through a divorce, lost my job, and left behind allot of unsecured debt

Since then I've worked off and on (mostly off) and been going to school.

Before all this had happened, I had filed for BK about 10 years ago now

I want to start paying off my unsecured debts so I can start fixing up my credit. However, the remaining balance on the foreclosed home is way to much to pay off!
House went from 320k to 140k value

I really don't want to go through BK again, but I don't want to pay off all my unsecured debt only to have the lender come after me for the remaining debt on the house and then be forced into BK anyways.

Can they come after me for it? If so, what are my chances that they will (even though its been 5 years now)?

[despritfreya]

I assume you purchased the home after you filed bk. . .

There is some missing info. Are you talking about the 2nd? If not, then you have no debt on the home. Either the anti deficiency statute applies or, if not and the property was lost to a trustee sale, the lender had 90 days to sue on the deficiency.

If you are talking about the 2nd and the 2nd was "purchase money", taken out when you bought the home and used to finance the actual purchase of that home, you, again, have no debt since the property was foreclosed.

If you are talking about a 2nd that was a true 2nd, taken out sometime after you purchased the home, then you do have exposure. The statute of limitations on collection of such a debt is 6 years after the default. So, when did you default?

Assuming we are dealing with a true 2nd, the lender or the JDB can sue you and there is no way to guess as to when or if that will happen. When/if it does you certainly can attempt to negotiate a settlement. If you have no heard a peep from the lender or JDB in years I do not recommend opening up the can of worms. Let it ride out the 6 years.

Des.

[pcazares]

It was my first home

I bought it with an 80/20 type loan

with a small down payment

Never took out a personal equity loan on it.

[despritfreya]

I bought it with an 80/20 type loan. . . Never took out a personal equity loan on it.

Then you have no liability on the 2nd. . .

In a very recent decision (1/20/12) the concept that a purchase money loan, be it a 1st or 2nd, is subject to the anti deficiency statute was once again confirmed:

Watson Commc'n Sys. Inc. v. Adamson No. CV-11-1114-PHX-GMS (D. Ariz, 2012)

“‘When a single property is encumbered by two deeds of trust, and the lenders under the first and second deeds of trust [are] entirely separate entities, suits based on the second note are wholly separate actions unaffected by the first lender's proceedings. . . Thus, a junior beneficiary holding a deed of trust securing a non-purchase money mortgage is not prohibited from suing directly on the note by any anti-deficiency statute, even if the senior beneficiary has already foreclosed. . .' Resolution Trust Corp. v. Segel, 173 Ariz. 42, 46, 839 P.2d 462, 466 (Ariz. App. Div. 1, 1992). Whether or not Defendants are to be afforded the protections of the anti-deficiency statutes depends upon whether their loan qualifies as a purchase-money obligation under Arizona law.” (Emphasis added.)

Your 2nd IS a purchase money loan under Arizona law therefore, if you were ever sued you would have an affirmative defense (failure to state a claim upon which relief can be granted) to the suit and the suit would not survive a Motion to Dismiss based upon the defense.

Des.