Arizona and California Anti-Deficiency Laws
Anti-Deficiency laws protect Arizona and California residents from shortages in their credit reports.
There are anti-deficiency laws that safeguard individuals residing in Arizona or California from shortfalls in their credit reports.
Some states implemented the anti-deficiency law to protect previous homeowners from paying for their mortgages after their homes are foreclosed.
Various anti-deficiency law implementations help homeowners from having their credit score lowered due to property foreclosures, missed payments, short sales, and delinquent payments.
According to the law, if an individual borrowed money from a lender or credit agency and could not pay their mortgage, their properties are foreclosed and obtained by the lender.
The lender then sells the property to pay for the mortgage. However, there are instances when there is a difference between the property’s amount to be sold and the mortgage’s balance.
In these instances, the law asserts that the borrower or the previous homeowner is no longer liable to pay for the difference.
The transaction should also not affect the borrower’s credit score and should not be shown in their credit reports.
The anti-deficiency law is mostly only applicable to first-lien home loans.
It covers loans made when buying single-family residential properties. It also takes into account the size of the property that was loaned.
The law may no longer be applicable to second mortgages.
Arizona and California Law Terms
The implementation of the anti-deficiency law is different for each state.
For individuals residing in Arizona, the anti-deficiency law protects them from late or missing mortgage payments.
According to their law, if they have missed or have been late for a mortgage payment, the transaction should not be included in their credit report.
For individuals residing in California, if their homes are already foreclosed or for a short sale, the anti-deficiency law states that they are not responsible for paying for the deficiency.
Therefore, the deficient amount should not be shown in their credit reports.
Though the anti-deficiency law’s implementation varies per state, it generally protects homeowners from being accountable to pay for shortfalls in their home loans.
Potential Class Action Lawsuit
An investigation is being conducted for a potential class action lawsuit against creditors that are not following California and Arizona’s anti-deficiency laws.
For individuals who think their rights have been violated, they can take legal action and file a class action lawsuit.
The class action lawsuit will help them remove the bad transactions from their credit reports.
It can also help them potentially seek compensation for damages they have incurred due to bad credit.
Individuals residing in Arizona or California who would like to file a class action lawsuit may be asked for the following information:
- Contact Number
- The type of transaction applicable to them – delinquent payment, foreclosure, late payment, or short sale
- Evidence that the transaction was included in their credit report
- Proof that the transaction lowered their credit score
- Details about the mortgage lender
- The mortgage details and terms
Editor’s Note on Arizona and California Anti-Deficiency Laws:
This article is published to inform you of anti-deficiency laws protecting Arizona and California residents.
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