It is no surprise to residents in the Phoenix metropolitan region that the housing market is not what it once was. No longer are homes increasing at record setting paces nor are they being sold in days. In these times, most people are left in a situation where they can not sale their property for what they still owe on the homehouse.
Here is a link to Arizona Short Sale Information.
This leaves a home owner with a few choices:
1) wait out the market, 2) let the lender foreclose, or 3) negotiate a short sale. If you can't wait for values to recover, you may have to look only at the later two options and while either is an ideal solution, either may not be as bad as they seem.
What is a Short Sale?
A short sale is a sale where the lender agrees to take less than the principal owed on the home as part of an agreed sale, in lieu of having the property foreclosed. The short sale must involve a sale at a fair value based upon an arms length transaction. There is also no requirement that the lender approve a short sale. This is realistically a voluntary agreement that the bank can decide to proceed with the borrower or not.
Why would a Lender Approve a Short Sale?
The most common reason a bank would accept a short sale is an economic decision based upon the amount owed and the value of the home. If the property has almost none or no equity the chances the bank receiving any funds at a foreclosure sale are low. Foreclosure sales often result in below market values and are costly to the bank. As such the lender can often recapture more by accepting the short sale.
What about Anti-Deficiency Laws?
Another reason a lender would accept a short sale is whether the state has anti-deficiency laws. An anti-deficiency law is a law that restricts a bank from recouping any loss over the price received at a foreclosure sale from the borrower/home owner. In reality, anti-deficiency rules restrict a lender ability to recover from home owners.
Does Arizona Have an Anti-Deficiency Law?
AZ has a relatively broad anti-deficiency that protects home owners. If your house is secured with a deed of trust and your house is sold at a trustee's sale the bank may not come after you for any deficiency if:
* The property is 2.5 acres or less;
* Used for one family or two family husing; and
* Sold pursuant to the Trustee's power of sale.
If the real estate is secured by a purchase money loan, that is a loan used to pay all or part of the acquisition price of the house, the lender may not recovery any deficiency if:
* The real estate is 2.5 acres or less
* Used for single family or two family dwelling; and
* The home owner did not reduce the value of the house by waste.
What if the Property is Not My Primary Residence?
The Arizona Anti-Deficiency Law protects all real estate under 2.5 acres used as a single family or two family residence. There is no requirement that the property is your Homestead.
What if it is a second Deed of Trust or Mortgage? The Arizona statute does not care about the first and second lien holders. If the requirements are met whether the lien is a first or second, or even third position, the law does not change.
There is a lot of info about short sales and seller options. For more info about Arizona Short Sales, be sure to visit this website by clicking the link.