The Dangers of Having a Relative Pay Your Mortgage

By Christopher Combs | March 7, 2016

 The Dangers of Having a Relative Pay Your Mortgage   Question: After I was transferred to San Diego two years ago, I let my brother stay in my home in Avondale. Instead of paying rent to me, my brother agreed to make the mortgage payments for the home. Although I knew that my brother was having trouble recently making some of the mortgage payments, my brother promised me that he would keep the mortgage current. My brother called me last week, however, to say that there had been a foreclosure of the home. I am upset with my brother because, if this…


No Income Tax on Short Sale or Foreclosure — For Now

By Christopher Combs | January 20, 2016

 No Income Tax on Short Sale or Foreclosure — For Now   Question: We bought our Mesa home ten years ago. The purchase price was $320,000. Our mortgage was $300,000, interest only, payments for ten years, and then amortized over the next fifteen years. Our home is only worth $240,000 today. Although we have been able to make the mortgage payments for the last ten years, our new mortgage payments will now almost double. We cannot afford to make these new mortgage payments. Our real estate agent is trying to help us with a short sale but, if we can’t do…


Mortgage Debt Relief Act Extended Through December 31, 2016

By Christopher Combs | December 23, 2015

 Mortgage Debt Relief Act Extended Again   The Mortgage Debt Relief Act of 2007 basically provided that no income tax would accrue for the debt relief given to a borrower after a foreclosure or a short sale of a mortgage used to purchase a home or to make improvements on a home. The Act expired December 31, 2014.   Legislation was passed this week to extend the Act again, this time until December 31, 2016. In other words, any deficiency as discussed above will not be taxable income to a borrower if the foreclosure or short sale occurs prior to…


Bank's REO Property not Part of Foreclosure Sale Profits

By Christopher Combs | November 23, 2015

Bank’s REO Property not Part of Foreclosure Sale Profits   Question:  After we refinanced our Mesa home three years ago my husband was badly injured in a car accident on the Loop 202 and lost his job.  We could no longer afford the mortgage payments and lost our home to foreclosure by the bank.  The bank’s representative says that our home is now their Real Estate Owned (“REO”) property.  In our neighborhood the home prices are finally appreciating, and when the bank sells our home the bank should be able to make a profit.  Are we entitled to any of…


Foreclosure Sale Likely Means Home Reverts to Original Owner

By Christopher Combs | February 15, 2015

  Question:  I sold my Chandler home five years ago for $75,000.  The buyers made a $25,000 down payment and I financed the buyers with a $50,000 “seller-carry-back” loan, i.e., the buyers agreed to pay me $50,000 in monthly payments over ten years at 12% interest.  The buyers are now going through a divorce and eight months ago stopped making the monthly payments.   My title company has now scheduled a foreclosure sale in approximately 90 days.  Will this foreclosure sale be a silent auction or will potential buyers bid against each other?  Who will own this home if no…


Arizona Prefers Deeds of Trust Over Mortgages for Home Loans

By Christopher Combs | February 1, 2015

  Question:  In Arizona a deed of trust is used rather than a mortgage for a loan secured by a home or other real property.  Other states, such as our home state of Massachusetts, use mortgages rather than deeds of trust.  Is there an Arizona law that only deeds of trust must be used?   Answer: No.  Arizona law provides for mortgages, and since 1971 Arizona law also provides for deeds of trust.  Most mortgage lenders, however, prefer deeds of trust for several reasons.   One, a mortgage can only be foreclosed judicially by court proceedings, i.e., judicial foreclosure sale,…


New Anti-Deficiency Laws Don’t Apply to Rental Properties

By Christopher Combs | January 23, 2015

  The new amendments to Arizona’s anti-deficiency laws, effective January 1, 2015, do not apply to rental properties, meaning that anti-deficiency protection will still apply for rental properties.  The reason is that the amendments are designed to deny anti-deficiency protection to “spec” homes that are never occupied.  Occupied rental properties continue to meet the existing statutory requirement of “utilized as a dwelling.”


Foreclosure Wipes Out Quit Claim Deed

By Christopher Combs | December 28, 2014

  Question: We have lived in our Arcadia home in east Phoenix for more than 25 years.  We have always watered and trimmed the oleanders between our home and our neighbors’ home to the east of us.  In 2005 we entered into an agreement with our neighbors to continue to water and trim these oleanders in exchange for a quit claim deed from our neighbors to the land underneath these oleanders.  We paid for the cost of a survey and for the cost of recording the quit claim deed.  Two years ago our neighbors lost their home to foreclosure.  The…