Arizona Repo Homes – Foreclosure Law Explained

In Arizona repo homes are on the increase, this state has also been affected by the national housing crisis. In fact there is not a state in the US which has remained unscathed by the terrible rate of foreclosures being seen in during the last year or so. There are two different methods of foreclosure available to the lender in Arizona, namely the Judicial and the non-judicial processes.

Judicial foreclosure takes place when a lender is compelled to seek court intervention in the foreclosure of an Arizona repo home and non-judicial does not require court intervention. However the primary instrument of security, generally a mortgage or a deed of trust, must have a power of sale clause in order for a non-judicial foreclosure to take place.

In a power of sale for a non-judicial foreclosure, the bank or lending institution instructs their trustee or representative that the home owner has defaulted on their mortgage, and the representative is allowed to go forward with the foreclosure process. Exactly the same steps have to be taken as in a judicial foreclosure, the only difference being that the lender does not have to apply and wait for the court to grant permission for these processes to take place.

In other words, the home owner has to be notified that they are in default, and that unless they raise the funding to pay back money in default on the mortgage, the property will be sold within a certain period on auction. In Arizona this is a relatively quick process and generally takes around 90 days. However in a power of sale this could occur even faster. The process is cheaper and quicker than in a Judicial foreclosure.

Some states in the US allow rights of redemption to home owners, but in the case of Arizona repo homes this scenario does not apply. Rights of redemption allow a home owner who has gone into foreclosure to redeem their property for a certain period of time even after an auction sale has taken place. This means the property owner would have to raise the funds to repay the entire debt, plus late fees and any other costs involved in order to redeem their property. This seldom happens though, as if the home owner could not raise the funds to save themselves from the foreclosure process, the likelihood of them being able to raise the funds in a rights of redemption claim are very slim.

There is one further threat to the home owner who has gone into foreclosure in Arizona, this is the ability of the lender to institute a deficiency judgment. In some states this is allowed and in others not. In Arizona, it very much depends on the type of foreclosure which took place. A deficiency judgment allows the lender to file a case against the foreclosed homeowner for any outstanding monies owed on the debt.

Posted in: Repo Homes | Comments(0)