Mortgage Foreclosure Arizona

Mortgage Foreclosure Arizona

What are my alternatives in Arizona to foreclosure, and what are my potential liabilities?

I live in Buckeye, AZ. I built my house in 08. When the prices of houses dropped mine appraised at $137,000 and I owe $294,000 and the bank told me they don't do mortgage loans so they gave me a 5-year interest-only with a payment of $1,785 not including insurance and tax that was after we asked for a lower payment. My wife recently lost her job and I am finding it harder and harder to pay all my bills and my savings is dwindling fast. What can I do to get out of this loan without losing everything and try to find a home that fits my budget?

  • Consider HAFA, a federal short sale program, as an alternative to foreclosure.
  • Foreclosure hits a credit score hard, and should be avoided if possible.
  • Look into HAMP, a federal program for distressed homeowners.

My answer explores options for you to stay in the home or sell it without incurring a large liability, including:

  1. Home Affordable Modification Program, a federal program to encourage mortgage modifications for distressed homeowners
  2. Home Affordable Foreclosure Alternatives Program, a federal program that sets guidelines for short sales
  3. Foreclosure, in the event you default on your mortgages
  4. Debt Settlement and Bankruptcy, which are means of resolving any deficiency balance

Home Affordable Modification Program (HAMP)

The foreclosure process is expensive for all parties concerned, and the cumulative effect of many foreclosures can depress housing prices. To stabilize the housing market, the Obama administration created the Making Home Affordable (MHA) initiative. One program in MHA is the Home Affordable Refinance Program. HAMP is available to residents of their homes whose first mortgage is no more than 125 percent of the property's current market value. It is open to open to homeowners whose mortgage is guaranteed by Fannie Mae or Freddie Mac. Borrowers must be current on their mortgage, but at risk for foreclosure. To qualify a homeowner must also not owe more than $729,750 on a single-unit home, and their monthly mortgage payment must come to more than 31 percent of their gross income.

Home Affordable Foreclosure Alternatives Program (HAFA)

Another MHA program is Home Affordable Foreclosure Alternatives (HAFA). HAFA sets guidelines for short sales and deeds in lieu of foreclosure for distressed homeowners. If your servicer (the financial institution collecting your mortgage payments) participates in HAFA, then the servicer must follow HAFA's guidelines and deadlines. The guidelines provide financial incentives for both servicers and homeowners. The homeowner must also be eligible for HAMP, as set forth by the program guidelines.


Foreclosure is the legal process through which a lender (most typically a mortgage lender) repossesses an asset from the consumer borrower who has defaulted on their mortgage payments. Because foreclosure is expensive and usually results in a poor return, lenders do not like foreclosure any more than homeowners do. Accordingly, learn more about HAFA, as discussed above.

Arizona Mortgage Foreclosure

Arizona foreclosure laws are found in Title 33, Chapter 6, Article 2.

Under Arizona law, a lender may be prevented from suing the borrower for the deficiency following a foreclosure. However, Arizona's anti-deficiency laws are tricky. Under Arizona 33-814, a homeowner is liable for a deficiency judgment if they have not resided in their home for six consecutive months. A deficiency on a purchase-money mortgage is not allowed on residential property if a single one-family or single two-family dwelling that is on 2.5 acres or less (33-814G). A deficiency is allowed if the value of the house has declined because the homeowner has committed waste (33-814A). Consult with an Arizona attorney with experience in property law to understand your rights and liabilities in your situation.

For the benefit of readers residing in other states, see the resources on mortgage foreclosure in California, Colorado, Georgia, Illinois, Michigan, Nevada, and Virginia.

Each state legislature created unique foreclosure and anti-deficiency laws. Follow the links just mentioned to learn the foreclosure rules relevant to you.


You can resolve a deficiency balance or deficiency judgment in bankruptcy or debt settlement. Bankruptcy is a complicated process. Chapter 7 and Chapter 13 bankruptcy are the options appropriate for most consumers seeking debt relief. Unfortunately, after the passage of the Bankruptcy Reform Act in 2005, it became harder to file for a liquidation bankruptcy, and there is now more complexity to an already intimidating process. Filing bankruptcy can be difficult and, though a consumer can do themselves, I advise consumers to consult with an attorney licensed in their state to ensure the filing is completed accurately.

Debt settlement is an alternative to bankruptcy. It is also called debt negotiation, and is the process by which creditors agree to forgive a part of a balance, saving the debtor up to 60% of the original balance. The debtor pays the new agreed-upon sum. A debtor can negotiate directly with creditors or hire a debt settlement service to negotiate for you.

Debt distressing you? The Debt Coach is a no-cost online tool that will analyze your debts and show you the options available to resolve them and the costs and benefits of each.


Apply for HAMP first. If you do not qualify and cannot afford to remain in your home, ask your loan servicer about putting the home on the market in the HAFA program. Do what you can to avoid foreclosure.

I hope this information helps you Find. Learn & Save.




MMagdalena Pavlovich, Sep, 2011
My house was foreclosured on February of this year. I have a second loan (equity loan I think) with PNC. I called them and they say they can't do a loan modification because there is not collateral involve since the house was sold. What can I do about this loan? I live in Arizona and having financial issues. Am I obligated to still paying the second loan or since there is not collateral I'm not? Thank you,
BBill Admin, Sep, 2011
You may have no liability whatsoever for the second, depending on whether the second was a purchase money loan. You mentioned Arizona. Consult with an Arizona lawyer who has real property experience to learn what, if any, personal liability you have for the second. I realize a lawyer's time is not cheap, but the cost of ignorance is very expensive indeed if you have zero liability for the second.
RRaymond T, Aug, 2011
I stopped making payments on my house in Aug 2008. I left the property in Nov 2008. I filed bankruptcy which included the house March of 2010 because the lender never foreclosed on the property. The bankruptcy was granted. However, the house is still in my name years later. How do I get the property out of my name?
BBill Admin, Aug, 2011
If you surrendered your interest in the property in the bankruptcy as opposed to reaffirming it, you should no longer have your name on the title. Check back with the attorney that handled your bankruptcy.
JJill Doneker, Aug, 2011
I purchased a home in Arizona in 2007 for $155k, the current value is $83k. I had to move back east 4 months after purchasing due to the economy and lack of work. I have been renting the house since then and now my current tenant wants the rent dropped $100 to coincide with the market. This puts me at paying $276 out of pocket every month, on top of my current living expenses. I would like to just walk away from the home but am unsure of what will happen or what other options I have since I do not see myself returning to Arizona to occupy the home.
BBill Admin, Aug, 2011
Consult with an experienced Arizona real estate attorney. The fact that it is not an owner-occupied home may have a serious impact on your options and the consequences.