Mesa, AZ asked in Consumer Law, Contracts and Foreclosure for Arizona

Q: is it legal for 2nd mortgage to foreclose, buy the house at auction, not payoff 1st mortgage but pay monthly payment?

8 years after my 2nd mortgage forclosed I found out the frst mortgage loan which was an fha, is still in my name. The loan is active and payments have been made by someone without my knowledge for 8 years. My name is listed on the contact information but the contact adddress and phone is that of the lender who foreclosed. So basically my home was taken but I still own the loan. This is preventing me from qualifying for a loan to purchase a new home and I'm sure may have other ramifications. Neither my mortgage broker or my real estate agent has ever seen such a situation so I need advice on how to proceed.

1 Lawyer Answer
Diane L. Drain
Diane L. Drain
Answered
  • Consumer Law Lawyer
  • Phoenix, AZ
  • Licensed in Arizona

A: This happens all the time. The first loan has not been paid off, therefore there is still debt owing - by you. If this is Arizona property, under 2 1/2 acres, then lender can foreclose if the loan is not paid, but they cannot sue you. That is the good news. The bad news is that you still have a debt, even though you do not have the home. The second mortgage had a right to sue you (assuming this was not a purchase money debt), but it does not appear there was a deficiency, otherwise they would have already done so. The new owner of the home will continue to pay as long as they want to keep the home.

As far as "advice on how to proceed", there is no option. Try going to a lender that understands your situation.

I really wish I had better news.

Justia Ask a Lawyer is a forum for consumers to get answers to basic legal questions. Any information sent through Justia Ask a Lawyer is not secure and is done so on a non-confidential basis only.

The use of this website to ask questions or receive answers does not create an attorney–client relationship between you and Justia, or between you and any attorney who receives your information or responds to your questions, nor is it intended to create such a relationship. Additionally, no responses on this forum constitute legal advice, which must be tailored to the specific circumstances of each case. You should not act upon information provided in Justia Ask a Lawyer without seeking professional counsel from an attorney admitted or authorized to practice in your jurisdiction. Justia assumes no responsibility to any person who relies on information contained on or received through this site and disclaims all liability in respect to such information.

Justia cannot guarantee that the information on this website (including any legal information provided by an attorney through this service) is accurate, complete, or up-to-date. While we intend to make every attempt to keep the information on this site current, the owners of and contributors to this site make no claims, promises or guarantees about the accuracy, completeness or adequacy of the information contained in or linked to from this site.