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Arizona Foreclosure Law
Lenders who lend in the state of Arizona may foreclose on mortgages or deeds of trusts that are delinquent in either a judicial or non-judicial foreclosure process. Because of this lenders may foreclose on a property in default whether or not there is a Power of Sale clause in the contract which would authorize them to sell the home to pay off the balance of the mortgage that is in default. The foreclosure process in the state of Arizona usually takes around 3 months or 90 days.
Judicial Foreclosure
The judicial foreclosure process is used when the contract does not include a Power of Sale clause. In a judicial foreclosure, the lender files a lawsuit and obtains a court order allowing them to foreclose. The court must be in the same county as the property in question. Once the foreclosure is declared, an auction will be announced and the home will be sold to the highest bidder.
Non-Judicial Foreclosure
If the mortgage contains a Power of Sale, the lender can foreclose without going to court. The right to sell may be practiced by a trustee, or a representative of the lender. Typically, the process will follow the date, place, and procedure specified in the clause. If these details aren't mentioned in the clause, the foreclosure will proceed as follows:
First, the lender or trustee records a Notice of Sale in the county office where the borrower's home is located. The company is them given 5 days to send a copy of the notice of sale by certified mail to the borrower and any other parties involved. The notice is also published in a county newspaper at lease once a week for 4 consecutive weeks. The last notice should be published at least 10 days before the sale date.
Provided it doesn't disturb the peace, lenders can also post the notice on the property and the courthouse where the sale date is scheduled. The has to be done at least 20 days ahead of the specified auction date.
The lender can then sell the home for cash to the highest bidder, or set a "credit bid" wherein part or all of the money owed is canceled. Once the sale is confirmed, the buyer must make the payment by 5 pm of the same day, except on Saturdays and legal holidays. Otherwise, the lender can extend the deadline or postpone the sale. If they choose the latter, they have to post a notice specifying the new date at the venue of the last auction. The proceeds of the sale will be used to pay off the obligations of the loan, and distributed among the junior lien holders.
Right of Redemption and Deficiency Suits
Arizona foreclosure laws do not give borrowers a Right of Redemption. This means they cannot regain possession of their homes once the foreclosure is declared, even if they obtain the funds to bring the loan current.
The state also allows deficiency suits, a personal claim made against the borrower if the foreclosure is not enough to pay off the amount owed. The lender can sue the borrower within 90 days of the foreclosure, claiming the difference between the balance and the home's current fair market value. However, deficiency suits are not allowed on singe one or two family homes less than 2.5 acres, even if the winning bid is lower than the balance on the loan.