Understanding the foreclosure process in Arizona is an important part of navigating your own home foreclosure.
Before we dive in…
Foreclosures come in all shapes and sizes. Sometimes they are sneaky, sometimes they are blatantly obvious, and other times they creep up unknowingly. The best thing you could be doing is exactly what you’re doing right now and that’s educating yourself on the process so that you can make the most informed decision moving forward. Keep reading for some invaluable information!
Understanding the Foreclosure Process in Arizona
What is foreclosure anyway?
Foreclosure is the legal process that lenders use to take back property securing a loan, generally after the borrower stops making payments.
Foreclosure is no fun. Foreclosure can be stressful. But just know that it’s not the end of the world. There is a light at the end of every tunnel!
When you know how foreclosure in Arizona works… it arms you with the knowledge to make sure you navigate it well and come out the other end as well as possible. There are some key elements of the process that can really set you up for success if you start now!
The Basic Stages of A Foreclosure
There are a few stages that are important to any foreclosure process.
Foreclosure works differently in different states around the country.
The two ways different states use to foreclose upon a property are: judicial sale or power of sale.
Connect with us by calling CALL US! (480) 393-5331 or through our contact page to have us walk you through the specific foreclosure process here locally in Phoenix.
In either scenario, foreclosure typically doesn’t go to court until 3-6 months of missed payments have elapsed. Usually (but not always), a lender will send out many notices that you are in arrears – overdue or behind in your payment. You may know you’re behind on payments and this does not come as a surprise. Or you may inherit a house in foreclosure and have no idea how much money is owed and when the house will be taken by the bank. Either way the best course of action at this point is to not ignore these notices. That will only add to your stress and will not help get the bank on your side. Yes, the bank can be on your side in a foreclosure.
It may feel like the people who work at the bank are these big bad creditors butt hey are not. They are people just like you with bills to pay and a family to provide for. They are good intentioned individuals that would not want to see a family moved from their home because they are behind on payments. You have to help them help you by communicating and working with them so you both can find a win win solution together.
Under Judicial Foreclosure:
- Your mortgage lender must file suit in the court system.
- You’ll get a letter from the court demanding payment.
- Assuming the loan is valid, you’ll have 30 days to bring payment to court to avoid foreclosure (and sometimes that can be extended). This is why you should communicate with the bank early and often.
- If you don’t pay during the payment period, a judgment will be entered and the lender can request the sale of your property – usually through an auction.
- Once the property is sold, the sheriff serves an eviction notice and forces you to immediately vacate the property. If you think the stress of facing foreclosure is difficult, getting forcefully removed from your property is even worse.
Under Power of Sale (or Non-Judicial Foreclosure):
- The mortgage lender serves you with papers demanding payment, and the courts are not required – although the process may be subject to judicial review.
- After the established waiting period has elapsed, a deed of trust is drawn up and control of your property is transferred to a trustee.
- The trustee can then sell your property to the lender at a public auction (notice must be given).
Anyone who has an interest in the property must be notified during either type of foreclosure. This is especially helpful if you inherited a house in foreclosure because if there are multiple beneficiaries they will all get a notice, thus increasing the chances of finding out about it sooner.
Another example is any contractors or banks with liens against a foreclosed property are entitled to collect from the proceedings of an auction will also be notified.
What Happens After A Foreclosure Auction?
After a foreclosure is complete, the loan amount is paid off with the sale proceeds.
Sometimes, if the sale of the property at auction isn’t enough to pay off the loan, a deficiency judgment can be issued against the borrower.
A deficiency judgment is where the bank gets a judgment against you, the borrower, for the remaining funds owed to the bank on the loan amount after the foreclosure sale. This is how a foreclosure can haunt people for years after it is all said and done and also why it needs to be avoided at all costs.
Some states limit the amount owed in a deficiency judgment to the fair value of the property at the time of sale, while other states will allow the full loan amount to be assessed against the borrower.
Here’s a great resource that lists the state by state deficiency judgment laws, since every state is different.
Generally, it’s best to avoid a foreclosure auction. Instead, call up the bank, or work with a reputable real estate firm like us at Integrity Acquisitions to help you negotiate discounts off the amount owed to avoid having to carry out a foreclosure.
Experienced investors can help you by negotiating directly with banks to lower the amount you owe in a sale – or even eliminate it, even if your home is worth less than you owe. At the end of the day the banks want to get paid for the home, not end up with the home. Creditors and lien holders against the property also want to get paid which is hard to do if the property is going to auction for around what is owed on it.
For example, we helped a home owner negotiate down a $23,000 lien to just $2,300 because they house was going to be auctioned off and if the creditor did not take the deal they would have received nothing! We are also able to reinstate the mortgage and buy the house in foreclosure for cash from the seller. They walked away with some money in their pockets from the sale but more importantly avoided foreclosure and kept their credit clean!
If you need to sell a property near Phoenix, we can help you. You may feel as if you have no options but I promise that isn’t true. At Integrity Acquisitions we believe in delivering results for our clients whether we buy their property for cash or not.
We buy houses in Phoenix Arizona like yours from people who need or want to sell fast for cash. trust who you sell your home to!
Give us a call anytime CALL US! (480) 393-5331 or
fill out the form on this website today! >>
Another Foreclosure Resource For Phoenix Arizona HomeOwners: