Good morning. Don't pay any attention to the agent...the agent is not a lawyer and is only worried about his commission which the agent gets on a short sale but does not on a foreclosure. Pay attention to your lawyer. First, with regard to the first lien loan, Arizona's "anti-deficiency" statutes prevent a lender from suing a person for any losses on a home after foreclosure. As outlined in Arizona Revised Statutes, Title 33, Chapter 6.1, a person may not be sued by his or her lender if the property is located on 2.5 acres or less and is a single family residence or duplex. If your second lien was used to purchase the property, it would also be covered by this statute; if it was used for other purposes, it would not be. Let the lender foreclose. All the income you mention is all exempt and cannot be touched by the lender if they do pursue you on any deficiency on the second lien.
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