Short Sales In Tucson Arizona

Including Marana, Oro Valley, Sahuarita

 

A short sale is a type of listing or transaction that occurs when the market value of the home is not high enough to cover what is owed on the property AND that the homeowner has had a life change (loss of job, divorce, medical expense) in which makes them unable to afford the home.

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Typically the homeowner contacts a Realtor to list the home.  The homeowner should try to explore other avenues such as consulting with a CPA, lawyer and others to learn what options they have.  The Realtor works with the homeowner and the lender.  Upon submisison of a purchase agreement there must be agreement between the lender and the homeowner for the sale to occur.  One of the issues that must be settled upon is a deficiency judgement (more on these in another post).  This is when the sale of a home does not cover the loan amount and the lender then holds the home owner liable for the balance.  There are some legal protections available in the State of Arizona.

So why do a Short Sale?  Some have said that the time that a homeowers credit is destroyed is shortened (more on that in another post).  The bank gets more money in thier pocket versus going all the way to foreclosure and there is usually no problem with people living in the house after the deed is transferred back to the bank.  So there is motiviation for both a seller and the bank to do a short sale.

 

Arizona's Anti-Deficiency Laws

If you are like most folks that bought homes in Arizona in 2004, 2005, and part of 2006 with little money down, you may be upside down.  What I mean by upside down is that a buyer owes more than the value of the home.  The Tucson Association of Realtors have stated that home prices in the Tucson Metropolitan area has decreased by 16% in 2008.  Now some areas were worse than others.

Folks can handle being upside down if they don't have a life changing event that decreases their income.  But, we all know that in this economy jobs have been lost.  Some places have asked workers to take pay cuts and reduced overtime.  And there are some other life changes that affect the ability to for someone to continue to pay their mortgage.  Life changing events such as illness, divorce, bankruptcy, death of a spouse, etc.

Thanks to the foresight of some of our legislators there is possibly some protection to folks that get foreclosed on from a deficiency judgment.  Now, this is Arizona law and many states do not afford this protection. 

A deficiency judgment  would be a judgment issued by a court of law after a foreclosure that would require the borrower to pay the lender the difference between the proceeds of the Trustee's sale and what was owed on the home.  Right now in Arizona, that could be a big chunk of change.

The State of Arizona  Revised Statutes prohibits a deficiency judgement on any trust deed if the property is 2 1/2 acres or less in size and is used as a single-family or two-family dwelling.

With so many foreclosures in Arizona, the prohibition on deficiency judgements have become of great interest to borrowers and also lenders.  Case law in Arizona has upheld the prohibition on deficiency judgements.  However, as with law there always is a loop hole or gray area. 

Recently the Arizona Association of Realtors published an article outlining the case law and has identifed one area that is gray.  That gray area is when someone has taken out a loan (purchase money loan) and then refinanced said loan and with it borrows funds in addition to the remaining balance may or may not be covered by the anti-deficiency statutes.  This determination will possibly be decided in court someday.

You Have Options - You do not have to sell your home.

Some Options that you have:

1. Talk to a Housing Counselor - Avoid 'for profit' counselors and take advantage of 'not for profit'. See HUD website links to the right for a location near you.

2. Talk to your Lender - Discuss with our lender about the following options:

Reinstatement: Paying the total sum due by a specific date. Look to friends and realatives for assistance.

Forbearance: This is when the lender may allow you to reduce or suspend payments for a short period of time and then agree to another opton to bring your loan current.

Repayment Plan - You may be able to get an agreement to resume your regular monthly payments, plus a portion of past due payments each month until you are caught up.

Mortgage Modification - There may be a possibility to modify your current loan to more favorable terms and make it more affordable. See link to the left for the Housing Stimulus Plan.

Partial Claim - If your mortgage is insured, your lender might help you get a one-time interest free load from your mortgage guarantor to bring your account current.