Question: We are planning on doing a “strategic mortgage default” on our Gilbert, Arizona home. In other words, although we are financially able to pay our mortgage payments we do not want to pay “good money after bad” by making the mortgage payments when our home’s value is less than one half of the mortgage loan. We are also planning on not paying the real property taxes, the homeowner’s insurance, and the HOA monthly dues. After the foreclosure sale, will we have any liability for not making all of these payments?
Answer: First, if there is a foreclosure of your home you 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, you will have personal liability for this damage. Therefore, you should confirm that either you or the mortgage company is paying the homeowner’s insurance. Third, you have liability for the HOA monthly dues until the date of the foreclosure sale. Finally, you have no personal liability for the real property taxes.
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