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Explaining the Foreclosure Process

Recently released data shows that foreclosures in Arizona are on the decline. According to numbers from data giant CoreLogic, the number of Arizona homes that were foreclosed on in February was 23 percent fewer than in January. That’s obviously very good news. As attorneys specializing in bankruptcy, we’re certainly encouraged by the news that less people are facing foreclosure. Unfortunately, we’re all too familiar with the realization that there are thousands of Arizonians who are still being forced to give up their homes.


Simply put, foreclosure is a legal process taken by your mortgage lender to sell your property in an effort to recoup the money they are owed. Here in Arizona, foreclosures can be non-judicial (happens outside of a courtroom) and judicial (initiated by a filed lawsuit). It’s important to note that Arizona is a title theory state. This means that your property title will remain in trust by your lender until your loan has been satisfied. This is different from a lien theory state, where the title is held by the borrower.


While the lender has a right to begin the process of foreclosure on the first day a payment is late, it normally takes a few months of late payments before action is taken. In other words, it’s up to the lender to decide when foreclosure action should begin. To begin the process, the lender will file Notice of Trustee Sale. Some lenders will send a Notice of Default as a final warning of what is about to begin. As for the Notice of Trustee Sale, there are a few rules that the lender must follow. These include the notice being:

  1. Recorded with county officials and mailed to property address within five (5) days
  2. Published in the local newspaper for four consecutive weeks
  3. Posted on the property itself

The homeowner can catch up on their payments – making their loan current – any time prior to the property being sold. During the Trustee Sale, bids are taken for the property. If no bids are made, it’ll revert back to the lender and will be referred to as REO Property (Real Estate Owned) – commonly known as a “foreclosed home.” It will eventually be put back on the open market by the bank.


After a foreclosed home has been sold, the new owner will be given a Trustee’s deed. However, if you deface the home or take appliances or other items before the trustee sale, you will be held responsible.


Remember, there is a strict procedure that must be followed during all foreclosures. If you feel that you have been treated unfairly, an attorney skilled in all things related to foreclosure can be a tremendous ally for you. If you’re facing foreclosure, please contact the offices of Statewide Bankruptcy today at (602) 225-2222 for a free consultation so that we can begin working together to help save your property.

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