Woman Stuck on Mortgage Despite Divorce

By Christopher Combs | April 5, 2015

  Question:  Under the terms of my divorce decree last year my ex-husband was awarded title to our Gilbert home.  He was required to pay the mortgage payments on our home.  I even signed a quit claim deed for our home to my ex-husband.  The problem is that when I recently applied for a loan to buy a car, I was turned down by the bank because the mortgage on our home is still shown as my obligation on my credit history.  My ex-husband does not want to sell the home at this time, and because of his poor credit…


Foreclosure Sale Likely Means Home Reverts to Original Owner

By Christopher Combs | February 15, 2015

  Question:  I sold my Chandler home five years ago for $75,000.  The buyers made a $25,000 down payment and I financed the buyers with a $50,000 “seller-carry-back” loan, i.e., the buyers agreed to pay me $50,000 in monthly payments over ten years at 12% interest.  The buyers are now going through a divorce and eight months ago stopped making the monthly payments.   My title company has now scheduled a foreclosure sale in approximately 90 days.  Will this foreclosure sale be a silent auction or will potential buyers bid against each other?  Who will own this home if no…


Arizona Prefers Deeds of Trust Over Mortgages for Home Loans

By Christopher Combs | February 1, 2015

  Question:  In Arizona a deed of trust is used rather than a mortgage for a loan secured by a home or other real property.  Other states, such as our home state of Massachusetts, use mortgages rather than deeds of trust.  Is there an Arizona law that only deeds of trust must be used?   Answer: No.  Arizona law provides for mortgages, and since 1971 Arizona law also provides for deeds of trust.  Most mortgage lenders, however, prefer deeds of trust for several reasons.   One, a mortgage can only be foreclosed judicially by court proceedings, i.e., judicial foreclosure sale,…


Prepayment Penalty Often Enforceable

By Christopher Combs | September 28, 2014

  Question:  When we refinanced the $220,000 mortgage loan on our Phoenix home, the mortgage lender charged a 3 percent prepayment penalty of $6,600 to pay off this mortgage loan.  Can a lender charge a prepayment penalty without showing that they lost money or some other reason?  Are we entitled to an income tax deduction of $6,600 for this penalty?   Answer:  The amount of any prepayment penalty is established by a clause in the loan documentation (the “note”), and is generally enforceable.  Most mortgage lenders will enforce a prepayment penalty clause when a borrower refinances the mortgage loan with…


Judgments Won't Scuttle Loan in Arizona

By Christopher Combs | September 7, 2014

  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…


Foreclosure and Your Taxes

By Christopher Combs | May 4, 2014

  Question:  We bought our home in a new Gilbert subdivision six years ago.  Although there has been some appreciation lately, our home is worth only $260,000.  We still owe $380,000 on the mortgage.  After my husband lost his job last year, we finally had to stop making payments, and the foreclosure occurred this February.  Our accountant now says that we could have income tax liability for the $120,000 difference between the amount of our mortgage ($380,000) and the value of our home ($260,000) at the time of the foreclosure.  Many of our neighbors in our subdivision have lost their…


Adios to Mortgage Forgiveness Tax Relief Act ("Act")

By Christopher Combs | December 19, 2013

The general IRS rule is that any forgiveness of debt will be taxable. In response to the housing disaster of the mid-2000’s, the Act was passed by Congress in 2007 to give relief to taxpayers who had debt forgiveness as the result of either a foreclosure or a short sale. The Act was subsequently extended until December 31, 2013. A bill to extend the Act for another two years to December 31, 2015, has been in the Senate Finance Committee since June 19, 2013. gives this bill a 1% chance of getting out of committee and a zero percent…


Can Retiree’s Checks Be Garnished?

By Christopher Combs | August 16, 2013

Question: I am a retired Marine Corps colonel living in Sun City with my wife of 47 years. Several years ago, our son and his wife wanted to borrow money for landscaping and a swimming pool in their backyard. We wanted our grandchildren to have a nice backyard, so we co-signed on the loan. Our son and his wife have now lost the home to foreclosure and have filed for bankruptcy. The lender has hired a collections attorney to hound us. This collections attorney says that the paychecks of federal employees, including military personnel, can be garnisheed to pay off a…