Can lien holder on a property after the foreclusre in AZ garnish my personal checking or saving accounts? (foreclose, mortgage)

[Greatday]

A one or two family residence, located on 2.5 acres or less, secured by a Deed of Trust, the lender must look to the property for their security - if the lender does a non judicial foreclosure (Trustees Sale), the lender cannot obtain a deficiency judgment.

However, Arizona law does give a lender an option to do a judicial foreclosure and, if the lender choses this route, the lender may be entitled to a deficiency judgment.

[Ponderosa]

Originally Posted by Greatday

A one or two family residence, located on 2.5 acres or less, secured by a Deed of Trust, the lender must look to the property for their security - if the lender does a non judicial foreclosure (Trustees Sale), the lender cannot obtain a deficiency judgment.

However, Arizona law does give a lender an option to do a judicial foreclosure and, if the lender choses this route, the lender may be entitled to a deficiency judgment.

It does not matter which process is used if the mortgage/deed of trust is for purchase money. If the money was loaned for other purposes, then the lender could pursue deficiency. It would be highly unusual for a lender to use judicial foreclosure when a deed of trust contains a power of sale clause.

OP: It's hard to get the right combos of and/or's etc in a post. Bottom line is you will not get stuck for the balance under the circumstances you describe. You may end up owing the HOA, though.

[RockThunder6]

Yeah. You are right. AZ law has an Anti Deficiency foreclosure Judgement regardless of whether the lender will do a judicial or non judicial foreclosure it is stated in the Baker VS Gardner 1988 case. As long it is a PMSI lender cann't suit for any deficency as long it fits the property decriptions above. Therefore, heloc or line of credit don't qualify. They are merely unsecured credit. They are not attached or recorded to the property and they are not on the Prelimary Title Report.

[Ponderosa]

Originally Posted by RockThunder6

Yeah. You are right. AZ law has an Anti Deficiency foreclosure Judgement regardless of whether the lender will do a judicial or non judicial foreclosure it is stated in the Baker VS Gardner 1988 case. As long it is a PMSI lender cann't suit for any deficency as long it fits the property decriptions above. Therefore, heloc or line of credit don't qualify. They are merely unsecured credit. They are not attached or recorded to the property and they are not on the Prelimary Title Report.

HELOC is not unsecured credit. It is secured by a junior lien on the property. I don't know what the usual practice of lenders on HELOCs has been in this financial climate. Normally, the proceeds would be sufficient to cover all loans, but these days, of course not. I suspect the lenders write it off and do not attempt to get judgments unless there is clear likelihood of collection - blood from a turnip. A "broke" homeowner probably has nothing to worry about. A "rich" investor might. In a previous financial crisis I sold a house with an assumable loan and "subject to" a second for my pool. The buyer defaulted a month or two after sale and the lender for the pool DID go after ME with collection efforts. I ended up paying for a pool I no longer owned for many years rather than ruin my credit. Live and learn.

[Greatday]

HELOC's are not unsecured. They can be a first position lien (in the case of free and clear property) or junior liens.

[Greatday]

One must also remember that where there is no deficiency judgment, the lender will send a form 1099 (misc income) to the borrower for the total amount of the loan that was "forgiven" and, that amount is subject to being added to the former borrowers income on their tax return.

While there is a temporary moratorium on "forgiveness of debt" reporting (signed by President Bush on Dec 27, 2007), it is temporary AND is applicable to primary residences only.

[Ponderosa]

Originally Posted by Greatday

One must also remember that where there is no deficiency judgment, the lender will send a form 1099 (misc income) to the borrower for the total amount of the loan that was "forgiven" and, that amount is subject to being added to the former borrowers income on their tax return.

While there is a temporary moratorium on "forgiveness of debt" reporting (signed by President Bush on Dec 27, 2007), it is temporary AND is applicable to primary residences only.

Didn't know that it only applied to primary. That could leave the OP owing thousands to the IRS after foreclosure since it sounds like it is on an investment property?

[MotleyCrew]

Originally Posted by RockThunder6

I actually lost my job and I had not been able to find another for past year. I'm not only depressed but worried about my future and the future of my country. ( U.S.A) not a America. The economy has gonna bad for many reason such as bad decisions of many companies and past administration and scams and dishonest people like Madoff and Enron that got billions from us.
Its not citizen like me that worried about a little saving account that I have saved for days like this. I hope you understand and know how Americans like me are feeling.

And thanks for everyone to defened and understand me. It will take all of us Americans to save our country by helping each other. You are a true American when you help an American in need. Thats what I believe.

Good bless America.

You can not help the loss of a job and I fear this is just the tip of the iceberg.

The people at the front of this crisis that walked away when they very well could have still made the payment started the crash. We had neighbors who had great jobs, still do, and simply did not want to pay more than the home was worth. What a shame.

You presumably did what you could and I wish you the very best in your job hunt. God bless you.

[KIMBER129]

I guess I missed if the original question was answered? If you have a heloc, on a primary residence, can they get a judgement on your savings account?

[Ponderosa]

Originally Posted by KIMBER129

I guess I missed if the original question was answered? If you have a heloc, on a primary residence, can they get a judgement on your savings account?

Yes, unless the equity loan was made and applied to the purchase price of the property. Some people have loans where they mortgaged 80% on a first and 20% as a down payment on a second as all the funds applied to the purchase price. Those would be "protected". But if you got one for improvements or consolidation or whatever, then they have the chance to go after you and get a judgment.