For those living in California, take heed of Arizona's new law allowing deficiency judgments in foreclosure actions.
In July, Arizona passed legislation removing the ban on a lender obtaining a deficiency on a foreclosed home except in instances in which the borrower lived in the residence for more than 6 consecutive months and was able to prove it with a certificate of occupancy. The bankers love it but public criticism has prompted legislators to repeal the July legislation.
Arizona bankers are not taking this sitting down though and are appealing to the Arizona Supreme Court trying to block the repeal on technical grounds.
For more of an explanation of when a lender can obtain a deficiency, see my earlier article Commercial Foreclosure Basics, Part II.
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