Marshall Gross v. Citimortgage, Inc.

BACKGROUND

In January 2007, Marshall Gross bought a single-family home in Arizona, taking out two separate mortgages to finance the purchase. In an arrangement known as an “80- 20 loan,” the first (“senior”) mortgage covered 80% of the home’s purchase price ($161,896), and the second (“junior”) mortgage covered the remaining 20% ($40,474). In 2012, Gross, experiencing financial difficulties, stopped making payments on both mortgages. After he defaulted, the senior lender began the foreclosure process. Gross eventually lost his home at a trustee sale in June 2013.

Like many properties during the national subprime mortgage crisis, Gross’s home had lost significant value.

GROSS V. CITIMORTGAGE

Although he bought the home for over $200,000 six years earlier, it sold for only $161,400, barely enough to satisfy the senior mortgage. The proceeds did not cover the junior mortgage, now owned by CitiMortgage. Because Arizona law precludes suit on a foreclosure deficiency, CitiMortgage, which bought the junior loan from a different bank in 2007, lost its investment entirely.

In 2017, Gross began shopping for a new home, but initially could not get approved for a…