Foreclosure Attorneys in Glendale AZ Protect Clients Against the Infamous Deficiency Judgment

by | Aug 17, 2015 | Law

There’s a whole lot going on underneath the surface of the technical foreclosure. In the state of Arizona, foreclosures are frustratingly common. Mortgage lenders have found savvy ways to move through the court system while arguably taking advantage of borrowers and a bad financial position. There are number ways they do this, but the most common is known as a deficiency judgment.

A deficiency judgment is applied after the home sells in the foreclosure market. If it sells for $100,000, and the mortgage is for $150,000, a deficiency judgment of $50,000 may be applied. In Arizona, mortgage lenders can apply a deficiency judgment without getting any kind of authorization from the borrower. They typically have 90 days after the property is foreclosed on. So clients thinking that the worst is behind them may actually get caught up in an overwhelming debt judgment. Unfortunately, mortgage lenders have the authority to garnish wages and pull directly from bank accounts to receive payment for the judgment.

Why are they able to do this? The answer generally turns back to the “power of sale” arrangement. “Power of sale” is something that is stipulated in most major banking contracts. It states that if a borrower is not able to pay back the debt owed, the bank has the ability to do whatever they feel with the property as per sale. They have the power to sell it at a price that they desire. By extension, they can retroactively go after a mortgage lender for the remaining balance. It essentially binds them to that mortgage rate until all parties agree. With that, a lender does not have to get permission to sell the property on the foreclosure market price they set.
Yes. Lenders can go after the finances of a borrower without the borrower knowing. The borrower will be informed of what is going on in the letters, but there is no permission or written statement needed from the borrower. They are only being informed of the situation.

This is why having Attorneys in Glendale AZ present remains so vital. They can act as a buffer between the lender and the borrower, and make sure that their clients are not being unfairly taken advantage of to a process that is unnecessarily abrasive and advantageous to the lender. Click here to reach Asheton B Call, one of the leading attorneys in Glendale AZ.

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