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.

1. You might not have time to do research: If you decide to buy a foreclosed home at auction, you won’t have time to research it. Liens will be wiped clean and you will be responsible for any property taxes. There is also no home inspection, and homes sell sight unseen. You could also get into a bidding war and end up paying more that you intended. Bargains can be had at auctions, but the risk may not be worth it.

2. Your profit can disappear with repair costs: Many foreclosed homes can be bought at a great price; however, if you don’t factor in the costs of repairs and maintenance your profit margin can be slim or next to none. For example, let’s say you buy a foreclosed home at $300,000 that’s worth $350,000. But the previous owners trashed the place. So you have to spend, $10,000 on carpet and paint, and then another $15,000 on the leaky roof and mold that has been discovered. Throw in more repair costs and your closing costs, and now your foreclosed home doesn’t look like so much of a great deal.

3. You run the risk of legal entanglement: As long as the owner still occupies the property, you could end up trying to process an eviction or finding yourself liable for back taxes on the property. Make sure you have an experienced Arizona real estate attorney or realtor working for you in order to negotiate aggressively and to mitigate your risks.

4. You may have to evict the current homeowners: Things could get nasty if you have to evict lingering residents from their lost home. Plus evicting homeowners can be an emotional process for you. Be prepared for previous owners to take out their anger and disappointment over the foreclosure of their property if you have them evicted.

This is a buyer’s market and there are many houses available at great deals that aren’t foreclosed. However, if you really want to buy foreclosed Arizona real estate, look for pre-foreclosures and don’t buy sight unseen. Buying a pre-foreclosed home will give you time to get a comparable market analysis and have the home inspected. You’ll also have time to negotiate the best deal. Whatever you do, don’t downplay the role of a qualified Arizona realtor to help you find and purchase foreclosures at the best possible prices. If you are looking to buy a home for your own personal residence or as an investment, please give me a call at 602-904-1496.

Mary L. in Chandler, AZ

A: Mary,
Your neighbors could face prosecution if they decide to strip their home. Not only is it considered a felony in Arizona, but it morally wrong. The following is a list of items that must stay in the foreclosed home:

• Appliances such as built in microwave, dishwasher etc.
• Cabinets and counter tops
• Furnaces and air conditioning units
• Plumbing and copper pipes
• Electrical wiring
• Light fixtures and ceiling fans
• Doors and hardware
• Flooring such as tile and carpet
• Windows and vents
• Medicine cabinets, sinks, tubs, toilets and showers
• Sink drains and faucets
• Landscaping, fencing, built-in pools and spas
• Built-in shelving / bookcases

Here are some other things you legally cannot do:

• Smash windows
• Spray paint walls or windows
• Turn on all the water faucets and plug up the drains

However, there are certain items a home owner can legally remove:

• All personal items brought into the home by the owner such as furniture, clothing and common household items such as dishes, pans and silverware
• Mirrors
• Personal artwork and photographs from walls
• Stationary lamps
• Pets and pet-related items such as dog houses or aquariums
• Drapes or curtains
• Refrigerators, televisions, computers and stereo equipment
• Area rugs
• Indoor plants
• Portable fans and heaters

I would strongly suggest that you talk to your neighbors and persuade them to reconsider rather than face the potential of serious consequences.

Do you have a real estate question?  Send me an email at: aboydston@redbrickrealty.net

“When you sign the deed to the home, you agree not to devalue the home.  Stripping it is devaluing the home and that’s illegal,”  states FBI Special agent Julie Falferty.

Not only is foreclosure stripping a felony but stripped homes have to be sold for 30 – 50% less than their full value.  Furthermore, buyers can’t get traditional financing, so only buyers who have cash and are willing to spend alot of money to replace fixtures can buy a foreclosed home.

The Maricopa County Attorney’s Office is starting to prosecute those who are involved in foreclosure stripping.  If you suspect someone on Craig’s List of selling fixtures from a foreclosed home, or believe your neighbors may be involved in foreclosure stripping, contact the local authorities or the attorney’s office.