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  1. #1
    Join Date
    Aug 2008
    Posts
    2

    Default What is the Best Option?

    My question involves a foreclosure in the State of: Arizona

    Thanks in advance to all that help. This is a tough time and I appreciate any help/advice.

    I have a house in AZ that I purchased as my primary residence a few years ago but I now cannot afford to pay the mortgage on due to job/medical issues. Rather than write a book, I'll break it down in short bullets below followed by a few questions. Hopefully I gave everyone the important info.

    -Listed on title as primary residence
    -Since moved to CA and purchased another house where I spend most of my time (can afford to make payments on this house but not both)
    -Originally purchased house with one loan (C-Wide).
    -A year later took out a HEL; 2nd paid Cwide 40K and gave me 50K cash out.
    -Currently 1st: 150K; 2nd 80K.
    -House worth about 155K now.
    -Renting house is not option....still could not afford pmts.
    -A family member is currently living there now...and I visit quite often.
    -payments are current now on both...but not for long.
    -I owe 18K in credit card debt and 11K auto loan to same bank that holds 2nd!!!! All payments current.

    Questions:
    1. I am thinking about trying to short sell the house. Is this the best option given my circumstances?

    2. If it short sells or forcloses, 1st will get most or all of their money....2nd will not get much. Can the 2nd seek a deficiency judgment against me for the remaining amt owed on the 2nd? I know there is that AZ law about if it is a SFR under 2.5 acres and wondered if that would apply to me? Somebody said no because I don't currently live there now...is that true even though I never claimed the house a rental property on taxes and the title shows it as primary residence?

    3. If I do get sued, can the 2nd come after my CA house. This house is my actual primary resid. and i used a VA loan to purchase. I have only 16K in equity in that house but cannot refi to pay 2nd because I have not owned it long enough.

    4. I know my credit will get hit hard but can they garnish my wages? If so, then I would not be able to pay for my CA house and would have to file Bankruptcy. Or is bankruptcy something I should be looking at now?

    I know some people will think that this is just another case of someone who overspent but the real deal is that I have been diagnosed with a disease and cannot work enough to make both house payments....even if I rented it out and had that income.

    Thank you,
    Lucy

  2. #2
    Join Date
    Apr 2008
    Location
    Texas (Dallas area)
    Posts
    1,404

    Default Re: What is the Best Option?

    Quote Quoting lucy25
    View Post
    My question involves a foreclosure in the State of: Arizona

    Thanks in advance to all that help. This is a tough time and I appreciate any help/advice.

    I have a house in AZ that I purchased as my primary residence a few years ago but I now cannot afford to pay the mortgage on due to job/medical issues. Rather than write a book, I'll break it down in short bullets below followed by a few questions. Hopefully I gave everyone the important info.

    -Listed on title as primary residence
    -Since moved to CA and purchased another house where I spend most of my time (can afford to make payments on this house but not both)
    -Originally purchased house with one loan (C-Wide).
    -A year later took out a HEL; 2nd paid Cwide 40K and gave me 50K cash out.
    -Currently 1st: 150K; 2nd 80K.
    -House worth about 155K now.
    -Renting house is not option....still could not afford pmts.
    -A family member is currently living there now...and I visit quite often.
    -payments are current now on both...but not for long.
    -I owe 18K in credit card debt and 11K auto loan to same bank that holds 2nd!!!! All payments current.

    Questions:
    1. I am thinking about trying to short sell the house. Is this the best option given my circumstances?

    2. If it short sells or forcloses, 1st will get most or all of their money....2nd will not get much. Can the 2nd seek a deficiency judgment against me for the remaining amt owed on the 2nd? I know there is that AZ law about if it is a SFR under 2.5 acres and wondered if that would apply to me? Somebody said no because I don't currently live there now...is that true even though I never claimed the house a rental property on taxes and the title shows it as primary residence?

    3. If I do get sued, can the 2nd come after my CA house. This house is my actual primary resid. and i used a VA loan to purchase. I have only 16K in equity in that house but cannot refi to pay 2nd because I have not owned it long enough.

    4. I know my credit will get hit hard but can they garnish my wages? If so, then I would not be able to pay for my CA house and would have to file Bankruptcy. Or is bankruptcy something I should be looking at now?

    I know some people will think that this is just another case of someone who overspent but the real deal is that I have been diagnosed with a disease and cannot work enough to make both house payments....even if I rented it out and had that income.

    Thank you,
    Lucy
    I am sorry to hear about your problem.

    First off, you are correct about the problem with your credit card debt, the auto loan and the second mortgage.
    The lender has right to offset, meaning move debt around to default all of your credit accounts with them.

    As far as your questions;

    1) I agree that bankruptcy would be your best cause of action. The second mortgage or HELOC can sue you for the full amount of the loan, repo your car etc. A second mortgage or HELOC is fully dischargeable in bankruptcy.

    2) You are correct on this issue as well, in AZ if the property is under 2.5 acres the first mortgage can NOT come after you for a deficiency judgment. If the property was a single or two family home they can not file a deficiency judgment regardless if you lived in the house or not.

    3) If the bank who financed your HELOC, car and credit cards wins a judgment from you, yes they can come after you in CA for it, again, bankruptcy would prevent that.

    4) You are a perfect situation for a bankruptcy , you should contact a bankruptcy attorney ASAP this site can help you find some in your area.

    I hope this all works out for you, good luck

  3. #3
    Join Date
    Aug 2008
    Posts
    2

    Default Re: What is the Best Option?

    Thanks for the info!!!!!

    Just one thing I did not understand about what was said below:

    First off, you are correct about the problem with your credit card debt, the auto loan and the second mortgage.
    The lender has right to offset, meaning move debt around to default all of your credit accounts with them.

    What if I continued to pay my car loan and credit card loan? What does "default all of your credit accounts" mean? I would think that they would still rather I pay my car loan and credit card debt?

    Ohhhh so the 1st cannot come after me for Def Judgment but 2nd can????? I thought the you were protected from 2nd too????

    Lastly, I do not believe I would qualify for Chp 7 because I make too much money (although not quite enough to pay for both houses). I believe chpt 13 would be okay for me as I don't mind paying them money....not trying to get out of all of this mess....just wanting to keep my CA house!

  4. #4
    Join Date
    Apr 2008
    Location
    Texas (Dallas area)
    Posts
    1,404

    Default Re: What is the Best Option?

    Quote Quoting lucy25
    View Post
    Thanks for the info!!!!!

    Just one thing I did not understand about what was said below:

    First off, you are correct about the problem with your credit card debt, the auto loan and the second mortgage.
    The lender has right to offset, meaning move debt around to default all of your credit accounts with them.

    What if I continued to pay my car loan and credit card loan? What does "default all of your credit accounts" mean? I would think that they would still rather I pay my car loan and credit card debt?

    Ohhhh so the 1st cannot come after me for Def Judgment but 2nd can????? I thought the you were protected from 2nd too????

    Lastly, I do not believe I would qualify for Chp 7 because I make too much money (although not quite enough to pay for both houses). I believe chpt 13 would be okay for me as I don't mind paying them money....not trying to get out of all of this mess....just wanting to keep my CA house!
    Even if you pay your car loan and your credit card they can move the debt. It is never a good idea to let one bank hold so much of your loans for this reason. MEANING, they have the "right to offset" so they can move your defaulted mortgage payments to your car loan, to your credit cards AND they can debit any deposit accounts you have with them as well.

    Right to offset clause will allow them to default all of your accounts even if they are current.

    If you file chapter 13 you will have to pay back a portion of your credit cards, you can re affirm your auto loan and keep the car. You will NOT lose the california house if you stay current on your payments up to the date that the bankruptcy if filed.

    Your deficiency on any mortgage, second mortgage, HELOC will stand a good chance for discharge and can NOT be attached then to your calif house.

    Actually you should talk to a bankruptcy attorney. Your income if high may be a better reason for you to file a chapter 7. Your future earnings are only calculated into the credit card portion of your bankruptcy.

    In a bankruptcy you can keep your home, as you do not have a huge amount of equity in it, your car falls under the same situation.

    With that deficiency on a first mortgage and the second mortgage will be a total loss for the lender. I really do not see any other way.

    Get those loans DISCHARGED this way they are GONE and they can not come after you. I assume you had an exotic loan from what I am hearing. I really do not feel sorry for lenders who issued these awful loans, and the second? really, they deserve what they get.

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