Arizona Supreme Court Gets it Right on Deficiency

Two newly released Opinions have been posted to the Arizona Supreme Court Opinions webpage. Please click on the links below for access. Basically they say that the borrower and guarantor are entitled to credit for the actual fair market value — not the value of the bid or any other formula. This could change 1099 tax forms filed, as well as attempts at collecting improper amounts for deficiencies. But note that many states, including Arizona (last time I heard) say that if the action is nonjudicial, there is no claim for deficiency anyway. If that is true in your jurisdiction, then ANY attempt to collect the deficiency might be an FDCPA violation entitling you to monetary damages.

CV-14-0029-PR CSA 13-101 LOOP v. LOOP 101 LLC et al


14 Responses

  1. The reason “banks” (in reality, servicers) issue 1099’s is that they can then take that amount as a tax-loss deduction on their own taxes, assuming that they are showing an accounting profit. If they show a loss, then it becomes a tax-loss carry-forward, and that makes the servicer more valuable to a purchaser of that company, if it is bought for both market size and for the tax losses. It also shield future income streams from taxes, effectively dumping taxable cash tax-free into the pockets of the sharks. The problems arise when it is realized that the servicer (or even the so-called “bank”) never paid anything for the loan note, or the mortgage, and never had any real right to make a claim onto the property in the first place, which is likely the case in 99% of foreclosures. What you end up with is a stranger to the transaction claiming a tax loss, and issuing a 1099 to a homeowner which creates a taxable income or gain to the homeowner from some entity that has nothing to grant of value in the first place. To no surprise, neither the IRS nor the Courts have any clue as to what is happening. Wall Street sharks continue to laugh at society, while pursuing a path of theft, fraud and deceit. Just lovely.

  2. Interesting the ‘sperts’ haven’t mentioned the extended federal tax exemption on forgiven deficiencies which was passed just a few weeks ago. See –

  3. I have a question. Do Americans’ really own land, or do we merely stake a claim to land through a deed or occupation?

  4. Christine, once again we see a case go the way of the owner of real property. Law has less to do with law today – and more closely resembles the luck of the draw.

    An entire case is now determined upon which throne it lands… If you are lucky enough to get a judge that simply looks at the intent of the legislators to arrive at their interpretation you may not have standing – but you stand a chance.

    If your file lands at the throne of a contract judge – and you have not raised issues regarding the contract (promissory note and mortgage) issues of standing and assignments are normally overcome with a slippery affidavit from the loan service agent.

    If the public ever got a good look at the credit fiction, which purportedly backs the tier one capital formula for our illustrious financial institutions, some would immediately realize that the charred embers drifting off these rogue corporations are about to start an even larger financial fire.

    A blaze so large that; every financial fire-extinguisher on the planet would be rendered useless. If they think I am wrong – let the FED move 150 basis points during 2015, and the smell of the cooked books will fill the air…

    Individual mortgages are merely the tinder…..


  5. From who though, think about that in the light of everything we know to be wrong with the picture and players.

  6. Fyi – you still need a 1099c.

  7. Back to the true-and-tried issue of standing and how Ohio appeals court ruled sua ponte (of its own volition) that WF did not have standing when it filed for FC, even though the defendant never argued standing.

    Heart-warming to see judges make the right call without being prompted to do so.

  8. Stupendous Man. Nothing is a silver bullet but we have google and public opinion.


  9. Big smile here

  10. A Man,

    Statutes requiring financial discolsure statements of jurists can be very limited in what is required to be disclosed. It isn’t a silver bullet. There are federal statutes, and also statutes for each state.

    The disclosures, being a matter of public record, should still be obtained.

  11. regarding Deadly Clear if we dont check our judges financials then it is our fault.


  12. Reblogged this on Deadly Clear and commented:
    Unfortunately, homeowners only get a fair shake when judges are intelligent and not on the take, pals with the banks, heavily invested in phony mutual funds or more concerned with their own retirement funds (which probably are not there anyway) than they are about making an honest decision.


    Notice that it does say: “In MANY states”. One still needs to check one’s state laws. However, nothing prevents anyone from having the “deficiency judgment” discharged in BK if one so chooses…

  14. “But note that many states, including Arizona (last time I heard) say that if the action is nonjudicial, there is no claim for deficiency anyway. If that is true in your jurisdiction, then ANY attempt to collect the deficiency might be an FDCPA violation entitling you to monetary damages.”

    I’ve seen this claimed before, but not seen the basis for [nonjudicial implies no claim for deficiency]. Anyone? references?

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