Who Has Homeowner’s Liability After Arizona Foreclosure Sale

Some Gilbert, Arizona residents are planning on doing a “strategic mortgage default” on their home. Meaning, although they are financially able to pay the mortgage payments they do not want to pay “good money after bad” by making the mortgage payments when the home’s value is less than one half of the mortgage loan. They are also planning on not paying the real property taxes, the homeowner’s insurance, and the HOA monthly dues. After the foreclosure sale occurs, will they have any liability for not making these payments?

First, if there is a foreclosure of a home the former homeowners should have no liability for any deficiency balance on the mortgage loan after the foreclosure sale. Second, if there has been any unreasonable damage to the home at the time of the foreclosure sale, the former homeowners will have personal liability for this damage. The homeowners should confirm that either someone is paying the homeowner’s insurance. Third, if there is an HOA on the property, the homeowners will have liability for the HOA monthly dues until the date of the foreclosure sale. Finally, there would be no personal liability for the real property taxes.

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