The Foreclosure Process

It is estimated that 1 out of every 200 homes will be foreclosed upon and that 250,000 families enter into foreclosure every 3 months.  In Arizona, the foreclosure rate is among the nations’ highest.  If you or someone you know is facing foreclosure, it’s important you know what the process entails.

When a homeowner (borrower) has missed a mortgage payment, the lender will send a notice indicating that they have not received that month’s payment.  After two payments are missed, the lender will usually send a “demand letter” and the homeowner would need to remit the late payments within 30 days of receiving the letter.

If after 90 days, the lender has not received missed payments, a notice of default will be issued, and the loan will be handed over to the lender’s foreclosure department.  The lender will usually give the borrower another 90 days to settle the payments and reinstate the loan.

If the loan has not been brought up to date within the allotted time, a notice of trustee’s sale will be recorded and the lender will publish a notice in the local newspaper, announcing that the property will be publicly auctioned.  The notice will include the owners’ names, a description of the property, the address and when and where the sale will occur.

At the auction, the home will be awarded to the highest bidder.  The opening bid is generally based on the value of the outstanding loan, costs associated with the sale and any liens or unpaid taxes.  Once the sale is completed and the highest bidder meets all necessary requirements, a “trustee’s deed upon sale” will be given to the winning bidder.  The house is then immediately in the possession of the purchaser.

If the home cannot be sold at auction, the lender becomes the owner and will try to sell the property through a broker.  Usually these are referred to as “bank-owned” properties.  Sometimes the lender may remove some of the liens to help sell the property faster.

Once the home is sold, either at auction or through a broker, the borrower will be evicted.  Sometimes they may be allowed several days to remove any personal belongings, but if they have not left the premises, the local authorities will be notified to evict the borrower and remove their belongings.

Many homeowners believe that once they miss a couple of mortgage payments, talking to their lender won’t help.  However, many lenders want to make arrangements for the borrower to get caught up on the loan rather than go through a foreclosure. If you have lost your job or suffered a health crisis and run the risk of foreclosure, speak with your lender immediately. However, if a foreclosure is unavoidable, knowing what to expect throughout the process can help better prepare you.

If you are interested in purchasing a foreclosed home, or other Arizona Real Estate, please give me a call at 602-904-1496 for all of your real estate needs.