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Post-Foreclosure Hell– Deficiency judgements.  Yikes this is scary.  Read the article but be sure to read the end.  I have tied this article to another about Arizona law and deficiency judgements.  If you are delivered a deficiency  judgement don’t panic it may not be applicable to you.  In other states the other rules apply.

Thousands of Americans who lost their homes to foreclosure years ago may have finally moved on, rebuilt their finances, and even considered home ownership again. But first, they may have to face a rising number of debt collectors who are chasing them down for money they still owe from the foreclosure they thought they had left in the past.


More banks are getting aggressive in pursuing deficiency judgments, finding that the proceeds of foreclosure sales may not have been enough to cover the amount of the loans, plus penalties, legal bills, and other fees.

“Using a legal tool known as a ‘deficiency judgment,’ lenders can ensure that borrowers are haunted by these zombie-like debts for years, and sometimes decades, to come,” Reuters reports.

“Before the housing bubble, banks often refrained from seeking deficiency judgments, which were seen as costly and an invitation for bad publicity. Some of the biggest banks still feel that way. But the housing crisis saddled lenders with more than $1 trillion of foreclosed loans, leading to unprecedented losses. Now, at least some large lenders want their money back, and they figure it’s the perfect time to pursue borrowers: many of those who went through foreclosure have gotten new jobs, paid off old debts, and, in some cases, bought new homes.”

Mortgage giant Fannie Mae is one of the most aggressive in pursuing deficiency judgments. Of the 595,128 foreclosures the government-sponsored enterprise was involved in through owning or guaranteeing the loan, it has referred 293,134 to debt collectors for possible deficiency judgment, according to a report by the Inspector General, reflecting the time period from January 2010 through January 2012.

Some of the largest mortgage lenders — JPMorgan Chase, Bank of America, Wells Fargo & Co., and Citigroup — say they don’t usually pursue deficiency judgment, but they do reserve the right to do so.

“We may pursue them on a case-by-case basis, looking at a variety of factors, including investor and mortgage insurer requirements, the financial status of the borrower, and the type of hardship,” says Wells Fargo spokesman Tom Goyda.

Many borrowers may be surprised to later learn that their foreclosure from years ago is not really behind them. For example, former home owner Danell Huthsing thought she was in the clear after a foreclosure in 2008 on a home she shared with her boyfriend.

But this summer, she was served with a lawsuit demanding $91,000 for the amount of mortgage still unpaid after the home was foreclosed and sold. She plans to appeal, but if she loses, the debt collector who filed the lawsuit will be able to freeze her bank account, garnish up to 25 percent of her wages, and seize her paid-off car, Reuters reports.

“For seven years, you think you’re good to go, that you’ve put this behind you,” said Huthsing. “Then wham, you get slapped to the floor again.”

This portion was by–October 15, 2014 by

Foreclosure in Arizona
In Arizona, mortgage lenders cannot get a deficiency judgement after foreclosure in certain situations; and if it can get a deficiency, the amount is limited.

Deficiency judgments are generally allowed. In Arizona, the lender can obtain a deficiency judgment by filing a separate lawsuit within 90 days following a nonjudicial trustee’s sale or as part of a judicial foreclosure.

Some deficiency judgments are prohibited. However, no deficiency is allowed after a nonjudicial foreclosure if the property is:

  • 2.5 acres or less, and
  • a single one-family or a single two-family dwelling. (Ariz. Rev. Stat. § 33-814.)

Also, no deficiency is allowed in a judicial foreclosure if:

  • the property is 2.5 acres or less
  • the property is a single one-family or a single two-family dwelling, and
  • the mortgage/deed of trust being foreclosed was a purchase-money loan (it was used to pay the purchase price of the property.) (Ariz. Rev. Stat. § 33-729.)

Limitation on deficiency judgments. Deficiency judgments, if available, are limited to the lesser of:

  • the total amount owed to the lender as of the date of the sale minus the fair market value of the property on the date of the sale, or
  • the total amount owed to the lender as of the date of the sale minus the foreclosure sale price.

This portion is from–NoLo Law for All (http://www.nolo.com/legal-encyclopedia/deficiency-judgments-after-foreclosure-arizona.html)