Steps can help simplify process of foreclosure

Although most Arizonans by now know a friend, co-worker or family member who has been through the home-foreclosure process, there is still much confusion about how it works.

Recent lender announcements about the temporary suspension of foreclosures in the 23 states that process home repossessions through the courts have muddied the issue further in Arizona, which uses a completely different, non-judicial system.

Sensitive to the widespread confusion, housing analyst Tom Ruff, of Phoenix-based Information Market, recently distributed a handy flowchart to his clients and other contacts explaining the process in detail.

Here is a summary based on the information Ruff put together:

1 Notice of trustee's sale - In Arizona, a foreclosure is technically known as a trustee's deed sale, or simply a trustee's sale. State law requires the "trustee," hired to administer the foreclosure, to provide the delinquent borrower written notice of the scheduled sale date. The date can be no sooner than 91 days after the notice was recorded at the County Recorder's Office. For all homes purchased from the beginning of 2003 through the end of 2008, the lender must first "attempt to contact the borrower to explore options to avoid foreclosure," according to Arizona law.

2 Possible delays - A foreclosure can be delayed in Arizona through two primary ways. One of them, personal bankruptcy, is initiated by the borrower. The other, trustee's sale postponement, is initiated by the lender. Personal bankruptcy generally delays the foreclosure just one time, after which the lender may choose a new sale date. Lenders can postpone a sale as many times as they want, but each time they must select a new date that's within 90 days of the previously scheduled sale date. A foreclosure also can be canceled if the loan is repaid in full or the lender agrees to a short sale or loan modification.

3 The auction - On the home's scheduled sale date, it will be included on a list of homes up for auction at the trustee's sale, which occurs every business day on the Maricopa County Superior Court steps in Phoenix. The trustee is required to publish on the previous business day a best estimate of the minimum opening bid that the lender would be willing to accept. There is no requirement that says the lender must accept that amount at the following day's sale. Each eligible bidder must bring a cashier's check for $10,000 and must pay the trustee in full for any purchases no later than 5 p.m. the following day. The trustee then has seven business days to "execute and deliver" the trustee's deed to the new owner.

by J. Craig Anderson, The Arizona Republic - Oct. 24, 2010 12:00 AM



Steps can help simplify process of foreclosure