Foreclosure process AZ

FRS Properties

As times get more challenging for everyone, foreclosures are becoming more commonplace. Getting a notice of foreclosure can be a scary experience as most Arizona homeowners aren’t familiar with what it means. We want to demystify the process so that you better understand your options and how much time you have to find a solution.

Why Foreclosure Happens in the First Place

When you take out a mortgage to purchase a home, your property is used as collateral to secure the loan. When you miss mortgage payments, your bank or mortgage company will start to consider foreclosure to protect the investment they made in giving you the loan. Thankfully, Arizona laws dictate how long a borrower has to become current on their loan, as well as options to dispute the foreclosure should they find it was processed in error.

How Missed Mortgage Payments Are Handled

Typically, mortgages come with a grace period on late payments that allow you up to 15 days to pay to avoid late fees. The concern for foreclosure starts once you’ve missed multiple payments, often in the form of letters from your lender attempting to collect payment. In addition to Arizona laws, there are federal mortgage servicing laws that your bank must follow. They must try to contact you via phone to offer alternatives to foreclosure within 36 days of the missed payment. You’ll also receive the same options in writing within 45 days unless you’ve filed for bankruptcy or requested that your loan servicer not reach out through exercising your rights under the Fair Debt Collection Practices Act.

The Arizona Foreclosure Process

Most Arizona properties purchased with a mortgage come with a deed of trust. This states that the lender will mail you a notice that you’ve fallen behind on payments, also known as a breach letter, as missed payments are a breach of the mortgage contract. It also details that if you can’t remedy the delinquent balance, they can start the foreclosure process as soon as 120 days after your first missed payment.

The bank may expedite the process if you’ve violated specific clauses in your mortgage agreement or if multiple lien holders join together to process the foreclosure more quickly.

What Happens After Foreclosure

If you cannot make up the mortgage payments, your home will be placed in an auction and sold to the highest bidder. Sometimes, the bid is enough to cover the amount owed to pay off the mortgage and relieve you of your financial obligations. Other times the lender may instead purchase the property to sell privately to make up the difference should the highest bid not be sufficient.

In Arizona, lenders can pursue legal action against you through a lawsuit to collect on the difference between the highest bid and the amount owed. To help prevent foreclosure on your home, reach out to the FRS team today, and we’ll start working directly with your lenders to find a solution that works for everyone involved.