FORECLOSURE IN ARIZONA: QUICK FACTS

Type of foreclosure:

            Judicial- a foreclosure process which involves filing a lawsuit to obtain a court order to foreclose, this is used when no power of sale is present in the mortgage or deed of trust.

            Non-Judicial-a foreclosure process used when a power of sale clause exists in a mortgage or deed of trust.  A "power of sale" clause is a the clause in a deed of trust or mortgage, in which the borrower pre-authorizes the sale of the property to pay off the balance on a loan in the even of their default. 

Time line:  90-120 days

Deficiency Judgements or Arizona’s Anti-deficiency laws:  On July 10, 2009, the Governor of Arizona signed into law (effective September 30, 2009) a significant amendment to Arizona's anti-deficiency statutes. This new law decreases the protection to Arizona homeowners after they lose their home to foreclosure.   The anti-deficiency statutes had not been amended since 1990.
            The Arizona anti-deficiency statutes (primarily A.R.S. §33-814(G)) generally protect most homeowners from being sued after foreclosure by their lender for any unpaid balance of the loan, i.e., deficiency, if the home was "utilized" as a "dwelling."  The Arizona courts have ruled that even vacation homes rented out by investors for only a few weeks of the year were being "utilized" as a "dwelling."
            The new law states that homes must be utilized as a dwelling "by the trustor [borrower] under the deed of trust for at least six consecutive months...." (Emphasis added.)  Therefore, occupancy of the home for at least six consecutive months prior to the foreclosure is now required. 

Power of Sale Foreclosure Guidelines:  If the deed of trust or mortgage contains a power of sale clause and specifies the time, place, and terms of sale, then the specified procedure must be followed.  Otherwise, the non-judicial power of sale foreclosure is carried out.       

For more information on foreclosure in the Tucson area, including Oro Valley, Marana, Sahuarita, and Vail, contact Julie Nellis, Long Realty, 520-990-8477 or nellisja@aol.com