Credit Lawsuit News
June 5, 2012
Cash out refinancing
The Arizona appellate courts at this time have not ruled on the liability of a borrower for the cash received on a "cash-out" refinancing of a loan used to purchase a home.
The Arizona appellate courts, however, have specifically ruled that a refinancing for the same amount as the original mortgage loan is protected by the Arizona anti-deficiency statutes.
In light of the large number of "cash-out" refinancings during the "boom years," the Arizona appellate courts are expected to rule soon on whether a mortgage lender can file a collection lawsuit before or after foreclosure for the amount of cash received at the time of the "cash-out" refinancing.
Cash out refinancing (in the case of real property) occurs when a loan is taken out on property already owned, and the loan amount is above and beyond the cost of transaction, payoff of existing liens, and related expenses.
Definition
Strictly speaking all refinancing of debt is "cash-out", when funds retrieved are utilized for anything other than repaying an existing lien.
In the case of common usage of the term, cash out refinancing refers to when equity is liquidated from a property above and beyond sum of the payoff of existing loans held in lien on the property, loan fees, costs associated with the loan, taxes, insurance, tax reserves, insurance reserves, and in the past any other non-lien debt held in the name of the owner being paid by loan proceeds.
Example of Cash Out Refinancing
A homeowner who owes $80,000 on a home valued at $200,000 has $120,000 in equity. That equity can be liquidated with a cash out refinance loan providing the loan is larger than $80,000.
The total amount of equity that can be withdrawn with a cash-out refinance is dependent on the mortgage lender, the cash-out refinance program, and other relative factors, such as the value of the home.
Michael Weston provides Debt Lawsuit Defense in all cities of Arizona, USA including:
602.635.6835
866-579-6411
Email
