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My 1st house has 2 morgage and we lived there until feb 2010 from 2005. we bought biger house in feb 2010 and we live there.

Peoria, AZ |

now our 1st house is rental properity and we also bought townhouse last july for $20.000.00 cash. my 1st house 2morgages is 2 1/2 month behind what options do we have and if we going into foreclose can my 1st house 2nd morgage company can come after my other propery?

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Attorney answers 2


First, laws vary from state to state to some degree and I note you are a resident of Arizona. Generally speaking, you may seek to sell the property to satisfy the mortgages and avoid foreclosure, and if there is negative equity you may attempt a short sale. You should consider seeking out the assistance of a realtor who has experience and certification in short sales. However, if that does not work out you may offer a deed in lieu of foreclosure, but with two mortgages that too is not likely to work. If foreclosure is started against you, get a lawyer! You have very important property interests that you must protect.
If foreclosure is granted, the lender will probably (state laws vary) have a right to obtain a deficiency judgment for the amount it did not recover. Once there is a money judgment issued against you, the creditor can and probably will seek to enforce it by filing a lien against your present home. If you can settle on the debt by making installment payment, or paying a lump sum in compromise, this too is an option.
You may want to consider filing for bankruptcy if other options do not work out for you, but be sure that you do not have excessive equity in your present home before considering this option. There's Chapter 13 bankruptcy if you have substantial equity in your present home.


The lenders on the first property cannot get satisfaction from your other properties. Your options on the first property are foreclosure or short sale. Depending on who you talk to, short sale may or may not be easier on your credit than foreclosure. As long as the first property is under 2 1/2 acres, duplex or smaller, and used for residential purposes, the lender cannot get deficiency from you on the first in Arizona. (However, talk to your CPA about possible IRS treatments of the deficiency.) As to the second, there are too many possible variations to discuss here: recommend seeing a lawyer.

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