Jeffrey M. Neff Real Estate Law Blog on Lawyers.com

Unfortunately, given the current economic situation, being out of work is not uncommon. However, before worrying about a foreclosure, you should realize that you have certain legal options. A real estate law firm can assist you in understanding Tucson real estate law. If you cannot pay your mortgage (or other financing instrument such as Deed of Trust), you may consider the following options:

• Talk to your lender: Contact your lender as soon as you realize that you might not be able to make a payment. You may be able to work with your lender to find another repayment option. Do not wait for your lender to call you.
• Open your mail: Look through your mail. If you receive a payment notice, respond immediately. The worst thing you can do is ignore these letters. You may face legal action if you continue to ignore delinquency notices.
• You have rights: Carefully read through your loan documents. An attorney who practices real estate law in Tucson can assist you in understanding your rights as a borrower.
• Keep a record: Make sure you record all any information given to you by your lender.

A "Workout"

A modification of the terms of the mortgage is the best way to handle problems with mortgages. However, whether the lender you have is willing to work with you is problematic. I have had many complaints of uncooperative lenders. There are no general, predictable guidelines for either commercial real estate or for residential real estate in this area. My observation is that such workouts or loan modifications are sometimes more a matter of luck than anything else. This does not mean that they should not be tried. Everything possible should be tried to avoid a default or repossession.

Your liability on a Real Estate Mortgage

Most residential first mortgages on property less than two and one half acres on which there is a house or a duplex is non-recourse under Arizona Real Estate Law. However, there are exceptions such as second mortgages. Your liability cannot be determined without seeing a real estate lawyer.

Walking Away

If the value of your real estate is very far below the mortgage, your lender will not cooperate and your have no liability, a reasonable strategy might be to simply stop payments on the loan and give the property back to the lender. However, certain obligations continue until the lender completes the foreclosure. For most people this will be your Homeowners Association monthly dues. Most of the Declarations of Covenants, Conditions and Restrictions provide for personal liability although not all of them. They must be read individually. Your liability cannot be determined without seeing a real estate lawyer.

Deeds in Lieu

Sometimes it is possible to negotiate with a lender to simply turn over the property. This procedure is usually called "Deed in Lieu of Foreclosure". It is not available in all circumstances, particularly where there is a second mortgage on the real property. Again, an individual determination must be made with a real estate lawyer.

Short Sales

Many times if a home is sold and the real estate purchase contract provides for less than the amount that is owned on the home, the lender will accept that amount. This sounds simple but can be very difficult to pull off. A competent real estate agent experienced in short sales can be very helpful working in conjunction with a real estate lawyer.

Chapter 13 and chapter 7 bankruptcy

If you cannot pay your mortgage, you may be able to file for chapter 13 bankruptcy. This form of bankruptcy allows you to work with your lender to create a debt repayment plan to pay back your debts within three to five years. A lawyer skilled in real estate laws in Tucson can explain to you how to go about filing for Chapter 13.

Chapter 7 bankruptcy involves a liquidation of all of your assets and property, including real estate. The benefit to Chapter 7 is that it gives you a debt-free fresh start. A Tucson real estate contract lawyer may be able to inform you of other options if you cannot pay your mortgage. Many of these options are available.

The Law Office of Jeffrey M. Neff, P.C.
4568 E. Camp Lowell Dr.
Tucson, AZ 85712
Phone: 520-722-8030