Who is liable after a mortgage foreclosure that was assumed by a buyer?

Question: When we sold our Phoenix-area home two years ago, the buyer assumed our mortgage, which had a low 3% interest rate. The buyer is now in default on this mortgage, and we are receiving default notices from our lender. If the buyer doesn’t make the payments on this 3% mortgage, will we have to make the payments?

Answer: Probably not. When the buyer assumed the loan, the buyer became primarily liable for the payments on the loan. You became secondarily liable (i.e., guaranteeing payment of the loan). If neither you nor the buyer makes the payments on the loan, however, under the Arizona anti-deficiency law, A.R.S. § 33-814, the lender’s only recourse will be to foreclose on the home.

Contact real estate attorney Christopher A. Combs at azrep@combslawgroup.com .

This article originally appeared on Arizona Republic: Who is liable after a mortgage foreclosure that was assumed by a buyer?