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Posted by Ward-CA- on October 27, 2002 at 01:04:14:
In Reply to: ARIZONA FORECLOSURE posted by CC on October 26, 2002 at 23:46:38:
: I live in AZ. I own a house with a "wrap" mortgage, with an underlying loan with a bank, and the seller carrying the balance. Payments are made to an escrow company where my payment is disbursed to the bank, then the seller, taxes, association fees, etc.
: There is also a second mortgage on the house -- to a private lender, not a bank. The second mortgage is current, I am about 30 days late on the first mortgage.
: I recently lost my job and won't be started my new one until the first of December, and then for the first couple of months won't be making enough to pay for the house.
: I don't want to keep the house, as it will be too expensive on my new pay.
: The amount of the mortgages is approximately what the house is worth -- within a few thousand one way or the other.
: My question is: Can I quit claim the house to the first mortgage holder? What happens to the second mortgage -- do I still owe them money?
: Also, if anyone can come up with alternatives I'd appreciate it. Thanks.
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CC,
In order to deed your property to a lender in lieu of foreclosure you first have to have the lender’s permission. Otherwise, they will just repudiate a non-consented transfer to them.
The 2nd sounds like a hard money loan you got after you owned the property. If so, then the foreclosure of the 1st won’t wipe it out. It will just wipe it off the title of the property, causing it to be an unsecured loan.
As such the lender could go to court and sue on the unsecured promissory note and get a judgment against you. Once your appeal period has run they can then record the judgment in the recorder’s office as an abstract of judgment. That will act to prevent you from engaging in any real estate activity (buying, selling, refinancing) in that county until you pay their judgment.
