2012 Legislative Bills Regarding Short Sale and Foreclosures

Three bills have already been introduced in the 2012 Arizona legislative session regarding short sales and foreclosures. All three bills are pro-borrower, and attempt to reduce or eliminate a borrower's liability for a deficiency after a short sale or foreclosure.

The first two bills attempt to change the deficiency calculation as it relates to foreclosures of a mortgage loan by a lender that purchased the mortgage loan from the original lender. These two bills require that the starting point for calculating a deficiency is the amount paid to the original lender for the mortgage loan. For example, if a $100,000 mortgage loan on a vacant lot was purchased from the original lender for $40,000, and the vacant lot is now worth only $30,000, the deficiency after foreclosure under these two bills would only be $10,000, not $70,000.

Finally, following in the footsteps of a 2011 California law, the last bill attempts to eliminate any liability of the seller to the lender for a deficiency after a short sale.

Combs Law Group will continue to keep your advised of any new legislation in the areas of short sales, foreclosures and Arizona real estate laws.