Changes to Arizona’s Anti-Deficiency Law

This one is near and dear to me because I like a lot of people who bought a home back in 2005 and a bit earlier find themselves upside down in the current value versus owed mortgage amount of their primary residence. Like a lot other people I have been considering my options. After going through hell getting my loan modified so that the payment will stop increasing I find that I am about $198,000 upside down in my home.  What to do? Well I have a couple of options. I can keep it and hope I regain the lost equity and break even someday. (Not likely). I can short sell it or I can give the keys to the bank and walk away.

After some research I found that Arizona is one of a few states that protect a homeowner from being sued or sent to collections because they short sell or allow a foreclosure that sells for less than what is owed on the property. 

Under the current law (A.R.S § 33-814), lenders are prohibited from seeking a deficiency judgment where the trust property is 2.5 acres or less and is used as a single one-family or single two-family dwelling.

This is about to change come September 30, 2009 … This is from the Arizona Society of CPAs Blog. Take the time to read it and pass it on. It looks like it won’t affect homeowners that give up a primary residence but investors are a different story. If anyone has any thoughts or input it would be appreciated.