In these market conditions, homeowners are faced with a multitude of options when it comes to the mortgage and foreclosure process. This is the second article in a series of posts on the Pak & Moring website dedicated to educating the public on real estate law topics beginning with the Arizona foreclosure process.
The non-judicial and contractual way in which the mortgage lender can foreclose the mortgage and sell the property of a defaulting homeowner is called a trustee sale. This is exponentially quicker than filing a judicial case, and begins when the lender (trustee) deems a homeowner in default of the loan. If you are undergoing a trustee sale and would like legal advice, please contact Pak & Moring to discuss your situation.
The steps in a trustee sale are
- When a homeowner begins falling being on their mortgage payments, their lender will send them notices and letters identifying the loan default.
- A Notice of Sale is recorded by the trustee (lender) with the County Recorder in the county in which the home is located. The homeowner and any other interested (or invested) parties will receive a copy of the Notice of Sale and the Statement of Breach. The Statement of Breach will identify the defaults of the loan (e.g. failure to make monthly payments).
- The Notice of Trustee’s Sale is posted on the property itself, and the notice is also published for four consecutive weeks in a newspaper of general circulation in the county in which the home is located.
- Trustee’s sale auction occurs sometime between the hours of 9 am and 5pm on any day except Saturday or a Federal holiday. It will also take place no fewer than 90 days after the Notice of Sale was formally recorded.* During this auction the property will go to the highest bidder, and the lender is allowed to bid.
- Following the completion of the auction, the winning bidder receives the trustee’s deed and formally owns the property.
- The original homeowner no longer has any legal claim to the property, and has no right of redemption in a non-judicial foreclosure.
* During the 90 days prior to the sale, the original homeowner still owns the house and can sell it up until the day of the trustee’s sale, or if a bankruptcy is filed you can sell it as part of the bankruptcy workout process
(Please note: while informative, these posts are not intended to be formal legal advice and are not completely authoritative and should not be solely relied on as a primary basis for legal action.)
Additional Links and Resources
- Veterans Affairs – Phoenix loan administration and help hotlines –http://www.vba.va.gov/ro/phoenixlgy/index.htm
- Arizona Housing Counseling Agencies – approved by HUD –http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm?webListAction=search&searchstate=AZ
- Fannie Mae – http://www.fanniemae.com/
- Freddie Mac – http://www.freddiemac.com/