Foreclosed, Short-Selling Arizona Homeowners Face Deficiency Judgments When Property Size Exceeds 2.5 Acres
In Cave Creek, Arizona, KTVK-TV Channel 3 reports:
- Kimberly and her husband decided to short sale their home and after securing a buyer, Kimberly's lender, M & I Bank, sent a letter saying the short sale and purchase amount were approved. "They just recently, in the last couple of weeks, they approved the short sale and we were like "Yeah!"
- But inside the approval letter was a little paragraph from M & I Bank stating they had the right to sue Kimberly and her husband for the rest of the money reportedly being forgiven.
- In Kimberly's case, her $500,000 mortgage was approved to be short sold for around $250,000 but M & I claims it would sue Kimberly for the remaining $250,000 short fall.
- Dean Wegner has been in the real estate industry for years and is a frequent contributor to 3 On Your Side. He says Kimberly's problem lies in a little-known clause in the [Arizona] state law that says if property is more than 2.5 acres then the lender can and will sue homeowners for any balance left over. Kimberly's property is five acres.
- Remember, it’s not just for homeowners who are short selling. If you own more than 2.5 acres and are losing the home to foreclosure, financial institutions will probably sue you for the balance after the auction.
For the story, see Short selling: You better not own more than 2.5 acres.