Vacation Home & Second Home Debt in Arizona
Nine months out of the year, Arizona has some of the best weather in the country. It is no surprise then that many people from other states purchase vacation homes or second homes in Arizona. Even some Arizonan’s buy vacation homes elsewhere in the state, usually in the cooler high altitude climates of the northern part of the state.
Vacation Home Debt and Second Home Foreclosure Issues
Unfortunately, that dream of a second home in Arizona has become a disaster for many. If you took out a mortgage on your vacation home in the last 5-10 years, chances are it may be upside down in value. If you’ve also experienced a decline in income or other financial hardship, you may be considering letting your second home go back to the bank through foreclosure or short sale – or maybe you already have. So the question becomes, what will happen to the debt and your potential liability?
Vacation Home Foreclosure Debt Liability
Here’s the good news: Arizona has one of the most favorable laws for vacation & second home owners when it comes to foreclosure. In many cases, as long as the property is 2.5 acres or less, and a single or dual family residence, utilized as a dwelling, and the loan was for “purchase money”, the borrower will likely be protected from mortgage deficiency liability when the home goes to foreclosure and is sold for less than the amount owed.
This seems like a lot to digest, but for many vacation home owners, they will fit within the protection of the law. Where this becomes more complicated and potential liability exists is when the loan for the second home was not “purchase money”. This often is the case when there is a HELOC or second or third mortgage on the property. Back in the boom times, many vacation home owners were able to cash out the equity in the property via a HELOC or second mortgage and use those proceeds for other purposes. In some cases, this will result in liability to the borrower for those funds, post-foreclosure.
Negotiating a Settlement for Vacation Home or Second Home Mortgage Debt
Our firm focuses on helping resolve mortgage debt. We know how to negotiate with banks and lenders to settle vacation home or second home mortgage debt. It is very important that the attorney fully understand the intricacies of Arizona mortgage law, which is different than many states. Armed with this knowledge, we develop a comprehensive defense strategy that enables us to settle mortgage debt for a fraction of the amount the lender is demanding. This is done without bankruptcy, allowing the client to move on without the debt.
If you would like a free consultation to discuss your vacation home or second mortgage debt, call today.