There are a lot of factors involved, but here are the particulars:
1. They CAN sue you for a deficiency judgment if the amount they bid at the foreclosure is less than the amount owed.
2. That doesn't mean they WILL. I do nothing but foreclosure defense, and I've only seen them sue in Missouri a few times.
You should discuss this situation with a foreclosure defense attorney. There are things that may be able to be done in planning what you're doing, and reviewing all documents...
We have kept people in their houses for almost two years after a foreclosure in Missouri. These people obviously do not handle foreclosure defense cases. The foreclosure is done, then a period must be observed before they can even start the legal process.
An unlawful detainer action is filed, and you then have time to answer. You can request a jury trial if done timely. If they do not give you a jury trial, then you get a trial de novo and can do the entire process again.
Remember you also have time under the 2009 federal renters legislation. Tenants have the right to stay in their homes after foreclosure for 90 days or through the term of their lease.The protections expire at the end of 2012.
The HOA likely has a lien. If I were you, I might consider talking to them and seeing if you could buy it from them, then do the sale yourself. Consult an attorney familiar with these laws.
My firm has handled foreclosure defense all over, but we are just beginning in California. I would be happy to talk further about the particular challenges surrounding California law.
The property owner is really the person holding the cards in this situation. It would be good for that property owner to essentially work with your renter in a manner that we have seen work successfully here in Missouri.
A good, aggressive letter-writing campaign can sometimes stop a foreclosure,...
Contact me on this. I am attaching my web page to this answer. I believe there are things you can still do.
The bank has to give you notice of all steps. I am very interested to hear about your case.
Under federal law, you have a minimum of 90 days, or until your lease is up. If your landlord would give you a new lease prior to the sale, this would probably allow you to stay 90 days past. Your landlord should make sure that the bank has a right to foreclose, though. So many times they don't.
The banks are foaming at the mouth to foreclose. Sometimes they use the trial modification as a method just to put you further behind. Find someone in Arizona who knows how to work the foreclosure system, and get to them early.
We have handled Arizona cases successfully before.
I don't think I would settle. There would be a number of defenses that you could muster. Talk to an attorney who handles bankruptcy, and I'd just wait to see. You may be surprised at how long it takes them to do something.
You should definitely hire an Illinois attorney who is up to date on foreclosure law. My experience has been that the modification business is a complete scam. I would seek out how much information they truly have on your loan. That may be a more fruitful argument.
You need to be careful, because the banks will take advantage of you on things like this. Lucky for you, there are a number of good law firms working on this stuff, including Ice Legal in Florida. I would call them and discuss your situation. They may well be able to help.