Deb Smith


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Foreclosure/Loan Mods








These are the questions going through your own mind and we want to provide you some answers. 

So, let's take this head on.



First- let’s analyze how this happened. This is important because you need to be able to decide how permanent your situation is and please be honest with yourself so you can plan accordingly and make the best decisions for you and your family.  Let's get knowledgeable and in control.

The questions above and more will be answered in a minute..but first lets get a plan together of the facts we are dealing with. Let's focus for a sec on another set of questions.





  • What has changed in your finances that caused you to get behind on your mortgage payments?
  • You make less? Family medical bills or perhaps you've been ill and unable to work? 
  • Is this temporary or permanent?
  • Now the big question. What is a comfortable “affordable payment“ that would ensure you would not be in a bind if an unexpected expense comes along.


How does the foreclosure process work in Arizona?”


Before we dive into it- let me make one thing crystal clear. 


I am not an attorney!! If you are facing foreclosure you would be well advised to seek the counsel of an attorney, as well as a tax professional. Also, foreclosure laws, processes and timelines vary by state. What follows here applies to ARIZONA. It may or may not be accurate for your state.



it’s important to know that Arizona operates as what is called a “title theory” state.

Property title remains in trust until your loan is paid off. Legal title is held by your lender and the borrower/home owner has equitable title (the right to possession and use of the property in the absence of default).



In a “title theory” state, which is the process used in Arizona, the foreclosure process is governed by the “Power of Sale” clause in your loan documents. The Power of Sale clause gives the lender the right to sell the property if you default (don’t make the payments). This is also known as a “non-judicial foreclosure”, which means the entire foreclosure process can happen without the court system or it’s authority.  The vast majority of foreclosures in Arizona are non-judicial in nature. That is what we will explain below.




1) The home owner goes into default. Technically speaking, a lender could begin the foreclosure process on Day 1 that your mortgage payment is considered late. In most cases however, that doesn’t happen. Typically it takes several months of missed payments before the lender initiates foreclosure. Why? Basically because the lender wants your payment, not your house. So while the harassing phone calls may start early, it’s highly unlikely that a lender will start the foreclosure process on the first missed payment. The time can vary wildly by lender.


2) The Notice of Trustee Sale is filed. At some point, the lender will decide to initiate the foreclosure process and they (more accurately, the Trustee) will record a Notice of Trustee Sale (NOS). Some lenders may issue a Notice of Default (or demand) (NOD) prior to a Notice of Trustee Sale as a sort of “final warning” that your home is about to enter the foreclosure process, but NOD’s are not required under state law.



There are several rules that stipulate how the NOS is handled. It must be:

  • Recorded at the county recorder’s office.
  • Advertised once a week for four consecutive weeks in a local newspaper (the last “advertisement” must be published no less than 10 days prior to the date of the sale).
  • Notice must be posted, either at a conspicuous place on the property, at the courthouse, or the trustee’s place of business.
  • Within five days of recording the Notice of Trustee Sale, a copy must be mailed via certified mail to the property address (the mailing or the posting on the property is often when tenants find out the home they are renting is going into foreclosure).

The Notice of Trustee Sale will specify where and when the property is to be sold “at auction”. Sometimes the sale takes place “on the courthouse steps”, and sometimes it’s at the trustee’s office. By law, the sale must take place at least 90 days after the notice is recorded. (Of note, trustee sales are often postponed, but they can not occur less than 90 days after the NOS is recorded.


At any time you will be able to "reinstate" the loan.

This means all of your past payments and any interest and fees the lender accrued to get this far will need to be paid by you to make this go away.

Up to and until the gavel comes down on the sale.

Once that happens, your turn is over.




3) The Trustee Sale. At the stated time and location, the home goes up for bid. Often no bids are made, or the minimum bid is not made and the home will revert to the lender. At that point it becomes an “REO property” (Real Estate Owned) aka a “bank owned home” or (technically erroneously) a “foreclosure”. The bank will at some point put the home up for sale on the open market. It can take anywhere from a few days to several months before a bank will place a property on the market.


Now. with all of this said, there are instances where the lender can "fast-track" the deal and foreclose before the 90 days.

If you vacate premises

If you destroy the premises



Of note, the homeowner is also responsible for the property during the 90 day trustee sale notice period. If you trash out your home, or take the appliances, cabinets, flooring, etc. prior to the trustee sale, you are breaking the law and can be held responsible for damages.





Your options if you have no equity

1/ “Friendly Foreclosure”- Deed in lieu- you simply give the bank the property and you move on AND OUT!

2/Short Sale- let your bank know this is the path chosen; they will ask you for income doc and a hardship letter- ( I have teams available to assist with this process)

List property for sale- submit the highest and best to the bank and ask them to forgive the amount over and above this price.

This gives you time to start anew and you are in control instead of the bank.

2/ Loan Modification- if you don’t care if you ever gain any equity- because the bank WILL tack on costs to do the deal and deferred payments interest etc on the back end of the loan.. And you’re good with repeatedly renegotiating your “affordable payment” with the bank after sending them multiple disclosures and paperwork.

This could work for you.

3/ Bankruptcy- Will stop foreclosure in its tracks.

4/ Get a loan from family and/or friends to cure the mortgage and all fees

5/ Wait it out without a plan and wait til the Sheriff comes knocking to evict you.


Your Options if you have equity

  • All of the above
  • List property for sale
  • Refinance the property and bring all current- you have to qualify for this and remember you are  delinquent on your mortgage payments- but if you have enough equity .. like 70% or below, this may be an option

DO THIS ONLY when you know you can afford the payments in the future. You don’t want to find yourself in the same position later and lose your equity to a poorly laid plan.

  • Rent the property to a qualified source that CAN afford the mortgage payment, giving them the option to buy in the future- You need to make sure your bank approves this and a Real Estate Attorney or Realtor negotiates this for you as there are a few moving parts that are essential.





Deb Smith, Broker of Desert Pride Real Estate Brokerage, LLC has been serving Arizona families for over 15 years. Deb has a passion towards empowering individuals with knowledge so they can make informed decisions.  As an Investor herself, Deb is committed in providing solutions and guiding consumers every step of the way.


“I pledge to assist families to their best decisions and will be there to guide you to the answers you seek.”






Deb Smith


Desert Pride

Real Estate Brokerage, LLC


3420 E Shea Blvd. Ste. 213 

Phoenix, AZ 85028

Direct: 602-571-0564

Office: 602-953-4385



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