Federal Deficiency Law to trump Arizona Anti-Deficiency law?

I received an interesting email today from an Arizona resident asking about a rumor he had heard regarding a new federal law that may go into effect that would essentially void all state laws and allow banks to pursue deficiencies against homeowners who are foreclosed upon or who do short sales.

Personally I had never heard of such a thing and decided to do a little more research on the subject.

Obviously such a law would be disastrous to the national economy as the only people benefitting from such a law would be banking institutions and bankruptcy attorneys!

One of the biggest issues with anti deficiency laws such as SB 1271 which is the law currently being passed in Arizona allowing lenders to pursue deficiencies is the fact that many homeowners were not aware of any deficiency statute at the time of loan origination.

In other words, when you bought the property there was no deficiency law in place!  This is true here in Arizona as the new anti-deficiency law is set to go into effect Sept 30, 2009 and will be retroactive to all loans made previously!

That’s like your opponent changing the rules of the game after they get ahead!  Not fair, not very constitutional, and not very pleasant!

In researching this rumor I have so far found it to be untrue.   I consulted most of my sources including real estate attorneys & lobbyists from both sides (it’s good to know what the banking institutions are thinking!!)   Noone has any information regarding such a law and to be honest it would probably be very difficult to get such a law passed.  Not to mention all the negative impact it would have on our new president’s campaign!

The Arizona law SB 1271 is still in effect unless repealed by Governor Brewer in the next few days (if she’s willing to sign house bill HB 2008 into effect which in essence repeals SB 1271) but nationwide there does not seem to be any federal law allowing lending institutions to pursue homeowners for any deficiency.

For more information on Arizona short sale laws and foreclosure information visit our Az Short Sale website at http://www.AzHomeHelp.com or give me a call at (480) 241-4406 and I’m happy to discuss it with you.

Related posts:

1. Arizona Anti Deficiency Law Update
2. House Bill 2008 – Repeal of SB 1271 Arizona Anti Deficiency Law
3. SB 1271 Arizona Anti Deficiency Law Repealed!!!
4. Arizona Anti-Deficiency Law Exceptions
5. Arizona Anti-Deficiency Law may be repealed!