What Is The Foreclosure Process?
The foreclosure process is the legal process by which a mortgage company can obtain legal ownership of a property. It relinquishes a home owner from any and all right to a property and evicts the home owner from the premises.
In many cases, foreclosure can start as 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 right to initiate foreclosure proceedings against the home owner.
However, most lenders will try to work out alternatives with the home owner to avoid default.
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.
If the home owner has not reinstated the loan, the trustee will conduct that sale at a previously disclosed location. This can be at the county courthouse steps, a title company’s office, a lawyers office or other disclosed location. Every bidder is required to provide a cashiers deposit check (amount depends upon the selling agency. When the home is sold the buyer has until the following day at 5:00pm to pay the remaining balance in cash or other acceptable forms of payment as determined by the trustee. In addition to forfeiture of the deposit, any buyer who does not pay the balance owed may be liable for any loses suffered by any person in the transaction including the attorney.
If the buyer fails to pay by 5:00 pm the following day, the earnest deposit is forfeited and the second highest bidder is awarded the home and is given until the following day at 5:00 pm to pay.
Proceeds of the sale are used to pay off the primary lean against the home. If any proceeds remain, payment is made to junior lien holders in order of priority.
Title is conveyed to the winning bidder by way of a Trustee’s deed. This title transfer means the former owner has relinquished any right to reinstate the mortgage. In certain situations, lien holders may pursue a deficiency judgement against the previous owner to recover the balances owed. However, an Arizona home owner may be protected by such law suites under the law. Please check with your legal advisor. Under Arizona Real Estate Law, we are not able to give legal advise.
