Foreclosure of a Second Mortgage on Property in Arizona

[Head-n-Sky]

My question involves a foreclosure in the State of: AZ

I have a single family home in AZ. I purchased the home with a 80/20 five years ago. We are in the process of a possible short sale, the offer will not cover the full amount of either loan . The second loan is held by a TX mortgage company. Without a judgement the second mortgage has started removing money from our bank accounts. I have read the mortgage, and it states that they will do this based on TX real estate law, but my question is if the short sale goes through what state law (AZ or TX) will be followed regarding what is owed on the second?

I have read that in AZ lenders are prohibited from obtaining deficiency judgments on single family homes less then 2.5 acres, which ours is. Is this true for a short sale?

Thanks for any help.

[flyingron]

Regardless of WHERE the company is located, if the loan is secured by an Arizona property, Arizona property applies.
Absent a judgement they should not be able to take your money EXCEPT in the case that you've previously authorized them to draw from your account to make the payments. In that case, you can take actions to make that stop (notify them and YOUR bank both).

If there was no authorization or judgment given, contact your bank and inquire why these unauthorized withdrawals are being made.

They can't get a deficiency judgment, but most likely when you got them to agree to a short sale, you agreed for them to have recourse against you for the outstanding balance.