Foreclosed Arizona Homeowner Thwarts Lender's Illegal Lawsuit In Attempt To Collect Unpaid, Non-Recourse 2nd Mortgage Used To Purchase Home

From a press release from the office of Harper Law PLC:

• In a[n Arizona] foreclosure proceeding, the first mortgage is given preference over the subordinate or subsequent mortgages. In today's Arizona home market this process frequently leaves subordinate mortgages entirely unpaid after a foreclosure. Understandably, these lenders are pursuing all means possible to recover their losses, but oftentimes they have no legal recourse.

• Recently, Arizona Attorney Kevin Harper represented a homeowner who lost her home to foreclosure in late 2008. The lender on the homeowner's second mortgage filed a lawsuit to recover over $40,000 it alleged was owed on the second mortgage, which was money the homeowner used to purchase the house in 2006. Mr. Harper filed a Motion to Dismiss the lender's lawsuit pursuant to [Arizona statute] A.R.S. § 33-729(A), which states that a lender is barred from pursuing any action against a[n Arizona] borrower if the mortgage was obtained to purchase the [Arizona] home. After receiving Harper Law's Motion to Dismiss, the lender realized the futility of its action and immediately offered to dismiss the case and pay the client's attorneys' fees.

For more, see Arizona Real Estate Lawyer Warns of Frivolous Lawsuits by Second Mortgage Lenders.