Phoenix Real Estate Lawyers Blog

Bank of America recently agreed to pay $335 million to resolve allegations that its Countrywide unit engaged in a widespread pattern of discrimination against qualified African-American and Hispanic borrowers on home loans. The lawsuit was brought by the United States Department of Justice ("DOJ"). The DOJ says it's the largest settlement in history over residential fair lending practices.

According to the DOJ's complaint, Countrywide charged over 200,000 African-American and Hispanic borrowers higher fees and interest rates than non-Hispanic white borrowers with a similar credit profile. The complaint says that these borrowers were charged higher fees and rates because of their race or national origin rather than any other objective criteria.

The United States' complaint says that Countrywide was aware that the fees and interest rates that its loan officers were charging discriminated against African-American and Hispanic borrowers, but failed to impose meaningful limits or guidelines to stop it.

Continue reading "BANK OF AMERICA AGREES TO PAY $335 MILLION TO SETTLE DISCRIMINATION LAWSUIT" »

In Arizona, a person is required to bring a notice of claim prior to filing a lawsuit against a public entity or employee. The requirements concerning the notice of claim are set forth in Arizona Revised Statutes Section 12-821.01. The purpose of the statute is to allow the public entity to investigate and assess liability, to permit the possibility of settlement prior to litigation and to assist the public entity in financial planning and budgeting. The statute also aims to guard against the possibility that claimants will present the State with baseless demands.

Requirements of Notice of Claim Statute

Pursuant to A.R.S. §12-821.01(A), the notice of claim shall be filed with the person or persons authorized to accept service for the public entity or public employee within 180 days after the cause of action accrues. The cause of action accrues when the damaged party realizes he or she has been damaged and knows or reasonably should know the cause, source, act, event, instrumentality or condition that caused or contributed to the damage.

There is not a specific form that must be filed in order to present a notice of claim. The notice of claim is usually presented by filing a letter with the person authorized to accept service on behalf of the public entity. Some public entities have their own notice of claim forms, however, a claimant is not required to use the public entity's specific form.

Continue reading "NOTICE OF CLAIM REQUIRED WHEN SUING A PUBLIC ENTITY IN ARIZONA" »

Those of us from "back East" are accustomed to having lawyers assist with any real estate transaction. But things are different in Arizona. Buyers and Sellers are told that it is not necessary to hire an attorney. It is urged that attorneys are seldom needed because Title Companies do all of the necessary work.

All of this is true. It has been our practice for decades. But is this a good practice? Most real estate transactions go smoothly. A few do not. If your transaction is one of the few, who will be looking out for you? Your real estate agent? The title company?

Look at the documents you are asked to sign. These are "standard forms" prepared by lawyers for realtors and title companies. They contain release language protecting the realtors and the title companies. Title companies customarily disclaim all responsibility.

Although you have been told that lawyers are not necessary, the real estate documents you are asked to sign tell a different story. They recite that you have been advised to seek the advice of an attorney. Why is this? It is to protect the realtor in the event the transaction goes badly and you are damaged.

Continue reading "Are Attorney's Needed For Arizona Real Estate Deals?" »

What happens if you signed an acknowledgment of paternity and later find out that you are not the minor child's parent? What can be done if you wish to revoke the acknowledgment of paternity? In Arizona, the mother or father may rescind the acknowledgment of paternity within the earlier of:

1. Sixty days after the last signature is affixed to the notarized acknowledgment of paternity that is filed with the department of economic security, the department of health services or the clerk of the court.

2. The date of a proceeding related to the child, including a child support proceeding in which the mother or father is a party.

A rescission must be in writing and a copy of each rescission of paternity shall be filed with the department of economic security. The department of economic security shall mail a copy of the rescission of paternity to the other parent and to the department of health services.

Continue reading "REVOKING A VOLUNTARY ACKNOWLEDGMENT OF PATERNITY" »

In Arizona, many homeowners who lose their home to foreclosure are not required to pay their lender for any deficiency between what they owed on the home and the price that the home is sold for at a trustee's sale. This protection from liability is found in Arizona's "anti-deficiency" laws.

However, Arizona's anti-deficiency statutes do not protect all property owners from liability for a deficiency in the event of a foreclosure. In these instances, in order to determine the correct amount of the deficiency, the fair market value of the property must first be established. In MidFirst Bank v. Chase, 1 CA-CV 11-0013, the Arizona Court of Appeals found that a bank's bid price for a property sold in a Trustee Sale is not evidence of the property's fair market value for purposes of calculating a deficiency judgment.

In MidFirst Bank v. Chase, the lender, MidFirst Bank ("MidFirst") loaned $1,620,000 to a borrower. The loan was secured by a deed of trust recorded against real property, and was guaranteed by two individuals, Mike and Linda Chase (the "Chases"). The Chases defaulted and MidFirst purchased the property at the trustee's sale for a credit bid of $486,000.

MidFirst then moved for summary judgment against the Chases seeking a deficiency judgment of $1,325,044.09. The Chases argued that there was no deficiency because the "value of the Property far exceeds anything that could be owed on the Loan." The trial court granted MidFirst's motion for summary judgment. The trial court reasoned that, "No reasonable juror could find for [the Chases] on the issue of fair market value based upon the record presented." The Chases appealed and the Court of Appeals reversed the trial court's decision.

Continue reading "PURCHASE PRICE AT A TRUSTEE'S SALE IS NOT EVIDENCE OF FAIR MARKET VALUE" »

The nation's five largest mortgage servicers are exceeding the requirements of an agreement to provide aid to struggling homeowners, providing billions of dollars more in mandated loan-related relief to borrowers.

The relief comes from the national mortgage foreclosure settlement forged last year among the U.S. Justice Department, 49 states and the nation's five largest banks: Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial.

The settlement was intended to compensate borrowers harmed by the mortgage industry's robo-signing scandal, in which many people allegedly were foreclosed on improperly through bad paperwork and other abuses.

Continue reading "INCREASE IN AID TO ARIZONA HOMEOWNERS AS A RESULT OF THE GOVERNMENT'S SETTLEMENT WITH THE FIVE LARGEST U.S. BANKS" »

Making the decision to divorce is hard. Accomplishing a divorce is harder. Clients often ask what they can do to prepare for divorce and minimize potential problems. Here are some practical steps that will help.

a. Make sure that you have copies of all important documents such as deeds to real estate, titles to vehicles, bank statements, brokerage statements, retirement account statements, insurance information, employee benefit information, paycheck stubs and tax returns, both business and personal. Obtain evidence of all debt including credit card statements, personal loan information and other documentation of indebtedness. Obtain the originals of insurance policies and children's birth certificates and passports. It is common for these materials to disappear or become difficult to access once a divorce is filed. Monitor the mail for several months prior to a divorce to make sure that you have documents evidencing all assets and debts.

b. Keep your copies of these materials in a safe place--not at home or at any other location that your spouse has access to.

c. Open a new bank account at a new financial institution for the deposit of your earnings and other monies. Change passwords on all accounts that you have access to.

Continue reading "PREPARING FOR DIVORCE" »

Fannie Mae and Freddie Mac recently announced new rules for deeds-in-lieu of foreclosure. The new rules will become effective on March 1, 2013. A deed-in-lieu of foreclosure allows a borrower to convey all interest in a real property to the lender to satisfy a loan that is in default and avoid foreclosure proceedings.

The principal advantage to the borrower is that it immediately releases him or her from most or all of the personal indebtedness associated with the home. Another benefit to the borrower is that it hurts his or her credit less than a foreclosure does.

Due to the decline in the housing market, many homeowners have been stuck in homes that are worth much less than they owe. The new rules for deed-in-lieu transactions will assist many homeowners who no longer wish to remain in their homes.

The new rules apply to people who are current or less than 90 days late on their mortgage payments. To be eligible for the deed-in-lieu programs, borrowers are required to have a 55 percent debt-to-income ratio, which means that 55 percent of their monthly gross income goes to paying the debt and must also document a hardship, such as illness or a spouse's death. The home must be clean and not damaged.

Continue reading "FANNIE MAE AND FREDDIE MAC ANNOUNCE NEW RULES FOR DEEDS-IN-LIEU OF FORECLOSURE" »

With real estate values recovering, Federal Estate Tax liability is no longer just a concern for the wealthy. It is a real problem for many of us and it can greatly diminish the funds intended for college educations, weddings, and the care of grandchildren.

When we prepare an estate plan we recommend that it be reviewed every few years to make sure it still works. Now is a good time for such a review. Estate taxes are punishingly high. Our government may want more money, but our families need and deserve it more.

A Revocable Living Trust can help. A properly drafted Revocable Living Trust for a married couple can help to minimize estate taxes by effectively doubling the estate tax exemption. There are other advantages. A living trust is a private document. It is not recorded or filed with any court. It allows the transfer of wealth to the next generations quickly, cheaply and in confidence. Expensive and time consuming court procedures such as a Probate can be avoided. Continuing financial help and financial protection can be provided for persons who are dependent upon you such as minor children, elderly parents or a disabled family member.

Continue reading "REVOCABLE LIVING TRUSTS" »

The collection of child support has become even more difficult during the last years of general economic hardship. But government, State and Federal, wants payment to be made and has provided a large amount of help. If a parent does not pay child support, he or she is subject to enforcement measures to collect regular and past-due payments.

Prior to 2006, there was a three year statute of limitations for collecting on a judgment for child support arrears. The statute of limitations for collection of child support was eliminated in 2006. The following are some of the enforcement measures for collecting past due child support. 

• Passport Restrictions: Passport applications may be denied by the U.S. State Department. Presently, Federal law prohibits the issuance or renewal of a U.S. passport to anyone with child support arrears of $2,500.00 or more and allows the government to revoke or limit previously issued passports to such individuals.

• Driver's License Suspension: A valid, active Arizona license may be suspended if a parent willfully fails to pay child support for six months or more. This means the parent cannot be issued a new license or renew an existing license until the past due child support is paid in full or a satisfactory payment agreement has been reached.

• Suspension of Professional or Occupational License: A parent can also have his or her professional license or occupational license revoked or suspended if the parent deliberately has not paid child support for over six months.

Continue reading "ARIZONA CHILD SUPPORT COLLECTION" »

Arizona is one of a few states that has adopted a statute that automatically invalidates a newly divorced spouse as the beneficiary under his or her former spouse's will or insurance policy. The statute is A.R.S. 14-2804 and it also operates to invalidate the provisions of a Joint Tenancy Deed with Right of Survivorship converting it, instead, to a Tenancy in Common between the former spouses. The general rule is that if your spouse could remove you as a beneficiary or joint tenant, A.R.S. 14-2804 presumes that your spouse wishes this to be done and accomplishes it automatically--without notice to you.

This, on its face, sounds good. After all, who would want to continue a former spouse as the beneficiary on a life insurance policy or as a beneficiary under their will? In actual practice, however, this is not uncommon. Life insurance is often continued to provide for a former spouse and children of the marriage. A former spouse can be named as a beneficiary under estate planning documents for the same purpose.

Many people assume, as is the practice in many states, that their beneficiary choices will continue until deliberately changed by them and that a Joint Tenancy Deed will insure that their surviving joint tenant inherits the entire property.

But this is not always true in Arizona. Discovery of the problem usually comes after a death when it is too late to fix it. An unintended and disastrous estate planning result can happen. A totally unsuitable person can end up owning or in control of substantial assets intended for another. 

Continue reading "Automatic Revocation of Probate and Non-Probate Transfers Caused by Divorce" »

The Mortgage Forgiveness Debt Relief Act of 2007 ("the Act") has been extended until January 1, 2014. The Act exempts most homeowners from paying federal income tax on debt forgiven by lenders through foreclosure, short sale or loan modification.

The Act was set to expire on January 1, 2013. The extension of the Act is expected to impact the market for short sales. If the Act had not extended, then a seller would pay income tax on the amount of debt forgiven by a lender in a short sale. As a result, many homeowners may have been reluctant to attempt to do a short sale and pay a significant tax on the forgiven debt had the Act not been extended.

The Arizona Court of Appeals recently ruled in Independent Mortgage Co. v. Alaburda, that Arizona's anti-deficiency law (A.R.S. § 33-814(G)) protects a borrower who has a fractional interest in a vacation home.

The Alaburdas purchased a 1/10 fractional interest in a single-family residential condominium in Sedona. Independent Mortgage financed the purchase with a loan in the amount of $321,750, which was secured by a deed of trust on the 1/10 interest in the property. The Alaburdas could vacation at the property for up to twenty-eight days each year.

The Alaburdas defaulted on the promissory note, and Independent Mortgage foreclosed on the property via a trustee's sale. The property sold for $285,000, which was less than the amount owed on the promissory note. Independent Mortgage filed a lawsuit against the Alaburdas as a result of the deficiency balance.

Continue reading "ANOTHER FAVORABLE ANTI-DEFICIENCY RULING FOR ARIZONA REAL ESTATE OWNERS" »

Perceptions about bankruptcy have been changing. In the past, bankruptcy was seen as a mark of failure, something shameful not to be discussed. Now, bankruptcy is more often recognized as what it was always intended to be--a powerful planning option to re-organize, rehabilitate and empower. Bankruptcy clears away obstacles. It enables payment of college tuition. It facilitates planning for retirement. It makes life full of possibilities again. It gives hope.

But not all obstacles can be overcome. Some debts cannot be discharged in bankruptcy. Some of these are most taxes, most student loans, criminal fines and restitution payments, court ordered child support, debts that arise as a result of fraud or misrepresentation and also debts that you forgot to list on your bankruptcy petition. See our previous article discussing these kinds of debts and their ability to be discharged.

Even here, however, there can be exceptions. Taxes can sometimes be discharged if they are old. Student loans can be discharged where there is extreme hardship. The damage of a Federal Tax lien can be minimized by motion in an appropriate case. A second mortgage can be elimated in a Chapter 13 bankruptcy.

Continue reading "CHANGING PERCEPTIONS ABOUT BANKRUPTCY" »

If you were to survey the general public about a topic like probate you may find that many people don't quite know what it means. Interestingly, you'll probably also find that it is almost universally considered something to avoid. This reputation is warranted for a process that often unnecessarily saps its participants of time and money.

Well, it is time to add another component to probate which makes it undesirable. Ancillary probate. An ancillary probate is exactly what it sounds like. It is a supplemental probate proceeding under the umbrella of a bigger probate estate. It is most commonly used when a probate estate needs to be reopened or when a decedent owns property in more than one state. The latter situation provides us with another opportunity to advise people to take the necessary steps to avoid this type of hassle.

Imagine this far-fetched scenario. An individual moves from another part of the country to Arizona to retire. Upon moving here, this individual lives a modest life with a typical estate plan including a will. When this person dies, his heirs begin the expensive process of probating the estate.

Continue reading "Ancillary Probate: When it is necessary and how to avoid it" »