Legal Question in Real Estate Law in Arizona

Re: forecloaure

If the land is owned, and is less than two and one half acres, they cannot come after you after a foreclosure for a deficiency. A deed in lieu of foreclosure is the way to go. You also have the option of bankruptcy.

This is really a bankruptcy/consumer law question. You might want to re-submit it in that category. A bankruptcy attorney can help you, even if you do not have to file bankruptcy. They handle these sorts of consumer loan workouts.

Good luck.

Re: forecloaure

Walking away from a mortgage is almost never a good idea. If the owner does just walk away, the bank will foreclose on the mortgage and the home will be sold at auction. If the auction does not generate enough cash to pay off the mortgage, then owner will have to pay the deficiency to the bank. If the owner does not pay, the bank will sue the owner. If the bank wins the lawsuit (which is likely) then the bank will have a "judgment" against the owner for the amount of the deficiency (plus fees and other costs). The bank can then "enforce" the judgment in any number of ways, including garnishing money from bank accounts and wages. This will also crush the owner's credit score for years to come.

Clearly, walking away is a bad idea.

If the home is worth more than the amount of the mortgage, then just sell the home and pay off the mortgage.

If the home is worth less than the amount of the mortgage, then there are several options. One of which is for the owner to call the bank and tell them that he cannot afford the payments, and ask the bank if he can just sign the home over to the bank in exchange for the bank agreeing not come after him for any more money. This is called a "deed in lieu of foreclosure." Banks will never offer to do this, but if you ask, they just might go for it. (At least they will on a standard home, I've never tried it on a mobile home).

Contact the bank and ask for help, or see an attorney, the owner may have other options too. But, don't just walk away.