The Foreclosure Laws in Arizona
If you are facing foreclosure, you should understand state laws so that you know what to expect. Arizona operates under "title theory," which means that your lender holds your home's title in trust until you make your last payment. The mortgage document that shows this held title is called a trust deed. Your trust deed may also include a power of sale clause, which gives your lender permission to sell your home if you stop making payments.
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Judicial Foreclosure
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If your mortgage documents or trust deed do not contain a power of sale clause, your lender has to go to court in order to foreclose on your home. This process of judicial foreclosure begins when your lender files the foreclosure action and must follow Arizona foreclosure sale rules.
Nonjudicial Foreclosure
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The most common form of foreclosure in Arizona is nonjudicial foreclosure. This type of foreclosure occurs if your mortgage documents or trust deed have a power of sale clause. With nonjudicial foreclosure, your signature on the power of sale clause allows your lender to foreclose and sell your home without going to court.
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Power of Sale Process
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A nonjudicial foreclosure must follow certain procedures set forth by state law and the power of sale clause. Your lender or the lender's representative is required to file a notice of sale in your county. The notice contains the information regarding the auction of your home, including the location and date. Within five days of that filing, the lender has to mail a certified copy of the notice to you and anyone else on the mortgage loan. Also, the lender has to publish the notice in a local newspaper one time per week for four weeks. The last newspaper notice has to appear more than 10 days before the sale date.
Sale Rules
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The sale of a foreclosed home should be scheduled on a week day between 9 a.m. and 5 p.m. Also, the sale has to be scheduled for at least 90 days after the lender files the first sale notice. Foreclosure sales are auctions, where the highest bid generally wins the right to purchase the home.
Right of Redemption
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In some states, foreclosed homeowners have a right of redemption, which means that they can make payment in full within a certain time period after the sale and save the home. Arizona law does not allow right of redemption, so after the sale there is no further action you can take to reclaim your home.
Deficiency Judgment
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If your home sells for less than you owe, the lender can enter a court judgment against you for the balance. Your lender has to file this deficiency judgment within 90 days after the sale. However, if your land area was less than 2.5 acres and a one- or two-family home, Arizona law does not allow your lender to file a deficiency judgment.
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