An explanation of the process to expect when you stop paying your mortgage, including information about Trustee Sales in Arizona.
We Don’t Do Foreclosure In Arizona
April 14, 2011 By 1 Comment
There’s a misconception amongst the Arizona communities that we have “foreclosures.” Even to this date, I have referred to the loss of a home in Arizona as the foreclosure process. I have technically been incorrect, even though we all know what it means.
In Arizona, we also don’t have Mortgages. We have Deeds of Trust, also known as Trust Deeds. In the event that you stop paying your payments, your lender has the right to throw their hands in the air and say, “forget it! You won’t pay your bills, so we’re going to sell your house out from under you.” They don’t hire attorneys to sue you through a Judicial Foreclosure.
Most lenders in arizona will start sending you notices that you’re past due, and eventually they’ll try to scare you with a Notice of Intent to Accelerate your note, which basically means they’re threatening to exercise their right as defined in your note to call the entire note due in full. This action is done on what’s known as a Trustee Sale Notice.
A Trustee Sale Notice is issued publicly, recorded with the county, and mailed to you, and posted on your front door. From the date this is filed, you have 90 days before the house goes on the auction block.
So, rather than hiring attorneys, filing suit, and taking your home through the lengthy and expensive Judicial Foreclosure process, they simply put your house up for sale at an auction.
So then what?
Well, the bank will set an opening bid, and often this opening bid is a completely unrealistic amount. As a result, nobody will bid on the property, and the only entity that will actually buy it will be the bank itself. Once that happens, you’re out of the house. If there’s a bona fide tenant living in the house, the new owner must give them 90 days notice to vacate.
So Does Judicial Foreclosure Exist in Arizona?
Sure. It exists. In Arizona, when your your lender notifies you that they’re going to sell your home at a Trustee Sale, you have the right to re-instate the loan and get caught up all the way until 5PM the night before the auction. If you do so, it’s possible that you could again default, in which case the bank would once again issue a Trustee Sale Notice, which you have a right to re-instate. There’s a point at which you may abuse this enough that the bank would finally just say “screw it, we’re going to start a Judicial Foreclosure.” It’s rare.
Good News for Phoenix Real Estate
June 21, 2009 By Leave a Comment
It’s not a big surprise considering the number of homes that have been selling recently that the inventory has depleted considerably and the availability of affordable housing is drying up after this massive real estate hemorrhage.
I cannot tell the future, but I can see when there’s a break in a pattern, as you will also see indicated in the graph below. Whenever a market corrects, it usually over corrects to a comparable intensity of the original inflation. Prices were so overinflated, and people have SO overreacted, that the low prices in the valley are deflated and can be considered as artificially low as they were high.
Average Monthly Sales
If I base my opinion simply on the pattern in this graph which outlines average monthly sales in the Greater Metropolitan Phoenix Market, then we are on track to recover, and we will bounce back. Since Arizona is a national leader in real estate trends, we should see a healthy recovery. Again, I cannot predict the future.
It was towards the end of 2003, beginning of 2004 that things started to exponentially bloat, soaring to ridiculous heights, and absolutely crashing as quickly as a 747 filled with solid lead.
In August of 2005, my neighbor bought the same unit I purchased in 2003 for $200,000.00 more than I paid for mine. They are still there. Oops.
The market’s plateau began in approximately June of 2006, rose a bit more, and then decidedly burned in flames at about January of 2008, through March of 2009. The number of homes sold began to increase in May of 2008, but the price continued to drop.
What would have happened if we had continued to grow at a normal, typical rate of 4% per year? Perhaps the following, showing a line drawn at about a 4% increase over the same period of time. This shows that a starting value of $175,000.00 would over the time represented in this graph, grow to approximately $244,000.00.
Average Sales with Assumed 4% Annual Increase
One could argue at this point one of two possibilities. Either a) the market will quickly correct, over correct, and bounce back and forth over the next 8 years or so to find equilibrium along that blue line, or b) the blue line must be adjusted down, erasing all of the growth in this millennium.
If that’s the case, then the home you’re living in, which is now worth what it was pre-Y2K, will not be worth what it should be worth for as long, if not longer than it takes to re-write the entire first decade of this century. To reach home prices that we should be at, we’re looking at roughly 10 years of steady growth at a “normal” rate.
The problem is that nobody knows what normal is anymore BECAUSE OF THAT GIANT HUMP in the middle of the chart. Who’s to blame? Many people think it was the government forcing the banks to lend to people who couldn’t afford it which drove them to “get creative.” Dave Ramsey calls “creative financing” “Too Broke to Buy a House.” I tend to agree.
Either way, it will be interesting to see what happens, and ultimately, it appears as though we’ve experienced the beginning of the bottom of this roller coaster ride. Which means one thing…
If you haven’t bought a house yet, it’s time to buy. There’s blood in the streets and the street sweepers (the investors) have been very busy recently. Don’t miss out.
Don’t be Fooled by The Weather
October 3, 2008 By 5 Comments
Born in 1972, I have a long history of experience living in Arizona and through Arizona’s weather changes.
Every year, like clockwork, we experience two similar events. As the cooler weather aproaches, for a few days at the beginning of October, the weather cools down significantly, offering the illusion that Fall has arrived. Time and time again I remind people that it’s just an illusion and a crazy prank being pulled on us by the weather gods 
Every year when it cools off, it heats up again for a short period of time, then the temperature quickly falls off to a very cool level. There’s really a shortage of perfect days in the valley of the sun; those days where you roll the windows down in the car and speed around with your hair blowing in the wind (must have hair.)
When the weather warms up at the end of spring, the same thing happens. We get a warm spell, then it returns to a comfortable cool, and then WHAMMO! Hot.
Thankfully we do not experience freezing weather here during the day…although for those of us who don’t really know what cold is (I’ve never been below -7 degrees) we think that 50 degress is cold.
Either way, have a bit of patience these past few weeks and we’ll see some beautiful weather! It’s already fantastic at night!
