Second Mortgage and Foreclosure in Arizona

[mightymse17]

My question involves a foreclosure in the State of: Arizona

Hello, I have a condo which I intend to foreclose on. The primary mortgage is for $130,000 (Litton) with a second for $50,000 (Citi).

The second is listed as a "home equity loan". The condo was purchased "as is" so, $30k of the loan was purchase money, $20k was for home improvements, repairs & appliances (for which I have retained all of the receipts).

The purchase price was $160k with an 80/20 split + $20k in equity = $180k in loans total. Both deeds of trust include "power of sale". The condo meets the qualifications under Arizona's anti-deficiency law (ARS 33-814g) and is my primary residence.

The question is: If I foreclose, can Citi come after me for the second mortgage (home equity loan)?

Thank you very much for your response.

[Mr. Knowitall]

As I read ARS 330814(g) it doesn't distinguish between purchase money loans and other loans. But it's really something you should run past an Arizona real estate lawyer who is familiar with how your state's courts interpret that statute, and who can confirm that it applies to your property.

[mightymse17]

Follow up: A local real estate law firm stated that because the second loan has a deed of trust, the deficiency law should apply. However, there have not been any cases specifically addressing this issue that set a precedent. There is also a 6-year statute of limitations on foreclosures which mortgagors always retain their rights.