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The Foreclosure Process in Arizona
In Arizona, foreclosure can be a swift and
simple procedure by a mortgage company. Foreclosure is the legal process
by which a mortgage company can obtain legal ownership of a
property. It relinquishes a home owner from any all right to
the property and evicts the homeowner from the premises.
In most cases, foreclosure can begin a soon
as a home owner is late with the mortgage payment. If the payment is due
on or before the first of the month, for example, the lender has every legal
right to initiate foreclosure proceedings against the home owner.
However, most institutional lenders will try
to work out alternatives with a home owner in default before trying to
repossess a home. If a home owner works with his or her lender, the
lender will an additional three month window on average before foreclosure is
initiated. For more information on pre-foreclosure workouts with a
lender, click
here.
If an alternative cannot be worked out
between the lender and the home owner, the lender may begin foreclosure
proceedings. Because most home owners have a trust deed, the foreclosure
timeline is simple and quick because it does not have to go to court to
foreclose upon a home.
In Arizona, a lender must appoint its
trustee, the person or entity that has the legal right to sell the home in a
trustee sale, to handle the appropriate paperwork. By law, the trustee
must record in the county recorder's office a "Notice of Trustee's
Sale". This is the legal notice that the home is to be sold no
sooner than 90 days from the recording date of the notice. This notice
must also be published a minimum of once a week for four consecutive weeks in
a "newspaper of general circulation" in that county. The
trustee will mail a notice within five days of the recorded notice of trustee
sale to the home owner and other parties affected by the foreclosure.
Assuming that the home owner has not
reinstated the loan, the trustee will conduct the sale at a previously
disclosed location. Every bidder is required to provide a $1,000 deposit
to bid on the home. At such time, the home is sold to the highest
bidder, which may include the mortgage company. If the bidder
successfully wins, he or she has until 5:00 p.m. of the following day
(assuming that it is not Saturday or a legal holiday) to pay the remaining
balance in cash or other acceptable forms of payment as determined by the
trustee. In addition to the forfeit of deposit, a highest bidder who
fails to pay the amount bid by that bidder is liable to any person who suffers
loss or expenses as a result, including attorney fees.
Should the bidder fail to pay by 5:00 p.m.
of the following day, his or her $1,000 deposit is forfeited and the second
highest bidder is given until 5:00 p.m. of the next day.
Proceeds from the sale are used to pay off
the primary lien (trust deed) against the home (as noted on the trust
deed). If any proceeds remain, payment is made to junior lien holders in
order of priority. In the event that any remaining balance is left over
from the sale, the trustee will remit the balance to the ex-home owner.
Title is conveyed to the winning bidder by a
trustee's deed. This transfer of title relinquishes any right the
previous owner has from reinstating the mortgage or redeeming the property
after foreclosure. In addition, the trustee's deed clears the title of
any liens and encumbrances that are junior to the trust deed.
In certain situations, junior lien holders
may pursue a deficiency judgment against the previous owner to recover the
balances owed. However, an Arizona home owner may be protected by such
lawsuits under the law. For more information on anti-deficiency
statutes, click
here.
Very few options exist under the law that
prevent or impede a foreclosure. For more information on preventing
foreclosure, click
here.
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