If you are short on cash and just cannot make all of your Flagstaff home loan payments in one month, make the right choice. Your “second mortgage” is called that for a reason – it’s second in line. Whether this was a second mortgage put on the property at the time you purchased your Flagstaff home or a home equity line of credit (“HELOC”) doesn’t matter. If you are making tough choices, choose to pay the first mortgage loan payment in full and skip the second.
Your second mortgage lender is unlikely to foreclose in this real estate market. According to Chris Combs, lawyer for the Arizona Association of Realtors®, “the reasons are: one, the second mortgage lender may then have to pay the first mortgage loan or lose the property to foreclosure; two, there is generally no equity in most homes subject to foreclosure; and, three, the second mortgage lender would not be able to pursue any deficiency claim against the owner of the home after the foreclosure.” Arizona is an “anti-deficiency” state, which means that lenders cannot pursue collection claims after foreclosure if the home was a single-family-residence actually used as a home (whether by the owner or a renter). This doesn’t mean you are protected from attempts to collect on the loan – it just means the legal process of foreclosure is unlikely to be invoked by the second lender.
If you can’t keep up your Flagstaff home loan payments, the best thing to do is consider whether you are eligible to refinance or restructure your loans, or whether you are eligible to sell short. If you want to stay in the home, the first option is one you should pursue with your current first lender. If you need to move, give me a call to consult about the short sale option. Stop losing sleep over foreclosure! 
The above is for informational purposes only and is not intended as definitive legal or tax advice. You should not act upon this information without seeking independent legal counsel. If you desire legal, tax or other professional advice, please contact your attorney, tax advisor or other professional consultant. These issues are not “black and white,” so experienced attorneys and brokers may disagree.
My phone: 928-714-0001
My website: www.BestFlagstaffHomes.com | 
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