My question involves a mortgage in the state of: Arizona
I was foreclosed on in January and have my 2nd mortgage line of credit calling me regarding collection. It's a little tricky, because it was not a purchase money 2nd, but it was never used for cash-out. I purchased originally with an 80% 1st mortgage and a 15% line of credit with 5% down (price was $225K, so the 1st mortgage was $180K and the 2nd LOC was for $45K, but only $33,750 was borrowed at purchase), but the ability to borrow it back. At one point under this loan, about $5000 was borrowed back to pay down some debt of my ex.
Once the home appreciated, I refinanced to do a 1st mortgage of $210,400, and lower the line of credit to $13,150, thus increasing the amount that was in the fixed 1st mortgage, and greatly reducing the line of credit. I eventually paid the line down to around $11,000, but as the house went way under water, I eventually had to leave it behind. I did try to short sell it, and the 1st mortgage company was on board with a purchase price of $97K, but the 2nd wouldn't agree to their terms and hung it up at the last minute (it was already with a collection agent at that time).
My question is this: Because the loan was refinanced, can they still come after this for collection? I made it a point to never actually borrow against the line of credit after it was refinanced, and the collective loan amounts were never taken above the original purchase price, so I'm hoping I've got a leg to stand on here. They are coming after around $13K or so now, which would be the amount of the debt plus unpaid interest I would guess at the time of the foreclosure.