Question: I have lived in my home in Chandler for more than 10 years and have established good credit. There is another individual in Apache Junction with my exact same name (even the same middle initial) who has caused me problems because he has very bad credit, including several judgments by credit-card companies. I want to purchase a newer home in Chandler, and my mortgage broker said that the credit problems of this other individual with my same name should not be a problem. In other words, I will not have to prove that I am not the individual with bad credit. Wonderful news, but is it true?
Answer: Under Arizona law, a mortgage loan used to buy a home has priority over any judgments and liens against the buyer of the home. In other words, your mortgage loan on your newer Chandler home will be in first position even if you, as the buyer, have judgments and liens against you. Therefore, even if you were the individual who has several judgments by credit card companies, the title company could still issue a “clean” lender’s title policy to the mortgage lender that would ensure that the mortgage loan is in first position on your newer home. Even though Arizona law does not apply to IRS tax liens, which are governed by federal law, the IRS has ruled that mortgage loans used to purchase a home or other real property will have priority over IRS tax liens.