Understanding the Foreclosure Process in Arizona

Understanding the foreclosure process in Arizona, or whichever State your house is in, is an important part of navigating your own experience. It is a necessity to know and have an understanding of your options even when you are not facing foreclosure on your Arizona home.

Before we dive deeper into the topic… know the basics.

What is foreclosure anyway?

Foreclosure is the legal process that lenders use to take back a property that’s securing a loan. This happens generally after the borrower stops making mortgage payments.

It’s no fun. But understanding it helps you know that it’s not the end of the world. When you know how the process in Arizona works, you are armed with the knowledge to make sure you navigate it well with full understanding and come out the other end as well as possible.

The Basic Stages of A Foreclosure

There are a few stages that are important to the foreclosure process. Although it works differently in different states around the country, understanding how it works in your particular state helps a lot.

The two ways different states use to foreclose upon a property are: judicial sale or power of sale.

Let us help you get a better understanding of the specific process locally here in Arizona. You can connect with us by calling (520)261-6116 or through our contact page to have us walk you through understanding the process in Arizona.

In either scenario, it typically doesn’t go to court until 3-6 months of missed payments have elapsed. Usually, a lender will send out many notices that you are in arrears, like being overdue or behind in your payment.

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).
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.

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. For example, any contractors or banks with liens against a foreclosed property are entitled to collect from the proceedings of an auction.

What happens after a Foreclosure Auction in Arizona?

After a foreclosure is completed, the loan amount is paid off with the sale proceeds. If the proceeds from the sale of the property at an 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 on the loan amount after the sale. 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. You can find the state by state deficiency judgment laws including Arizona on this website since every state is different.

It’s generally best to avoid an auction. You can call up the bank, or work with a reputable real estate investor like us to help you negotiate discounts off the amount owed to avoid having to carry out a foreclosure. Experienced Arizona 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.

Check this resource out, if you need more information for a better understanding of the process and laws in Arizona.

If you need to sell a property in Arizona, we can help you. We buy houses in Arizona like yours from people who need to sell fast.

Here are additional articles we have that you can use as a guide for dealing with Foreclosure in Arizona: