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8 min read Feb 01, 2024

How to Stop Foreclosure in Arizona: 8 Effective Ways

Foreclosure in any aspect is a negative situation. No homeowner will ever want to foreclose their home because of any financial crisis. Facing foreclosure is an awful situation. There are two ways through which the foreclosure takes place: Judicial and Non-Judicial. Arizona allows both types of foreclosures, judicial and non-judicial. The foreclosure process has to follow state law. There are ways to stop foreclosure, through which you can save your home.

If you are currently in foreclosure it’s important for you to know, how you can stop foreclosure from taking place. There are various options you can opt for to stop a foreclosure from happening.

What Does Foreclosure Means?

Taking a loan from a bank or a lender to buy a house or property is common everywhere. Paying back the borrowed amount in the given time duration is also very important. If someone fails to pay back the loan amount, The foreclosure situation is very likely to come into existence. Foreclosure begins after the very first missed payment.

Foreclosure can also happen if the homeowner fails to pay the property tax levied upon them. There are various reasons for falling behind in payments like financial crisis, medical emergencies, and sudden loss of job.

Introduction to Foreclosure in Arizona

The foreclosure crisis peaked in 2010. The foreclosure process and mortgage services are heavily supported by state and federal laws after that. The non-judicial foreclosure may take some time but you may better chances if you quickly act upon it. In Arizona, people must sign a promissory note and mortgage when they take a loan to buy property. These documents give people some contractual rights as well.

Arizona foreclosures most likely give you the right to give you many benefits. They are:

  • Receive notice in the form of a breach letter before foreclosure.
  • You can apply for loan mitigation.
  • If you are in the military, you will get special protection.
  • Get notified about the foreclosure and chance to respond legally.
  • Pay off your debt to prevent a foreclosure sale.
  • Get any access money after a foreclosure sale.

Key Points About Arizona Foreclosure

  • Primary Security Instrument- Deed of Trust and Mortgage
  • Judicial Foreclosure- Yes
  • Non-Judicial Foreclosure- Yes
  • Right of Redemption- No
  • Timeline- Typically 90 Days
  • Deficiency Judgements Allowed- Varies

Ways to Stop Foreclosure in Arizona

There are ways of stopping foreclosure in Arizona that you need to know. Let’s cover them all:

Declare Bankruptcy

Yes, bankruptcy is a way through which foreclosure can be stopped. But you need to understand the concept of chapter 7 and chapter 13 of bankruptcy.

Chapter 13 bankruptcy in Arizona: It is a common option to go for to stop foreclosure. According to chapter 13 bankruptcy, you are given a payment plan of 3 or 5 years to catch up with the payment in arrears. The lenders will be given orders to stop going forward with the foreclosure process. They will have to give you time to get back to your payment arrangements.

Chapter 7 bankruptcy in Arizona: It is a liquidation form of bankruptcy. Unless you want the Kansas bankruptcy trustee to sell your house, it may be a less common option to pursue. Even though it is the lower-cost bankruptcy option, you still may not want to opt this option.

You need to understand what your payment plan is. Is your payment plan regarding chapter 13 bankruptcy worth pursuing? For instance: you have $150,000 in arrears on your house and your payment plan is for 5 years / 60 months. Will you be able to pay an additional $2,500 every month to cover your arrears?

Applying for Loan Modification

It has become difficult to fully pay off the mortgage payments. There are many reasons why you can miss out on payments or get late in paying the mortgage. Before this unwanted thing happens, you may go to your lender and find out if they consider a loan modification option.

Reinstating Your Loan

Do you have enough cash to pay off all the loan amount? Approach your lender with cash. See if they accept the payment and permit you to continue paying your loan amount without any legal interference. Lenders only want to recover the loan amount and so they will accept your offer.

» Direct Mortgage Lenders in Arizona: Click to know about the best mortgage lenders in Arizona.

Plan for Repayment

Great! You can make payments again after missing out on some payments. Find out what your lender thinks regarding your repayment plan. In the repayment plan, you are allowed to pay the missed payments slowly along with the current mortgage payments. You can come up with an agreement on the repayment plan to stop foreclosure. According to this, you agree to pay your missed payments along with the normal payments.

Refinancing

Refinancing may be a difficult option to consider. Interest rates are going up only making it difficult to think of loans. You can start with a new lender which means a whole new agreement. There may be one drawback. It might become difficult to qualify for refinancing if your credit score is negatively affected.

Sell Out Your Home

It’s really sad even to think of selling your house. But it is actually a good option to consider selling your home to avoid foreclosure. You may receive an amount more than the actual price of your home. Perhaps you could even buy a house worth more than the one you sold. You can stop something drastic from happening and your credit report will also not get spoilt.

» How to Sell a House in Arizona: Read the blog to know about how you can sell a house in Arizona.

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Short Sale

A short sale means that you can sell your home for an amount that is less than the amount you owe. The reason behind this is that sometimes your home is sold for a lesser amount in the auction. The bank/lender is sometimes not able to recover the whole amount they are hoping for. Home staging companies in Arizona can help you get more than the asking price.

Deed In Lieu of Foreclosure

A deed in lieu of foreclosure takes place when the homeowner transfers the property to the lender. The homeowner hand over the property to the lender, clearing all the debts they owe. The property is then owned by the lender. You have to vacate the property as soon as possible. This way you can easily save yourself from any damage.

Frequently Asked Questions

How long does it take to foreclose in Arizona?

Between 90 and 120 days
How Long Does the Typical Foreclosure Process Take in Arizona? Arizona lenders typically need between 90 and 120 days to foreclose on a property in a non judicial foreclosure process that is uncontested by the borrower.

What are the foreclosure laws in Arizona?

In Arizona, most foreclosures proceed via a non-judicial process governed by a deed of trust executed and recorded at the time of purchase. By electing this procedure, the lender may proceed with a trustee's sale without having to file an action in court.

How does a sheriff sale work in Arizona?

A sheriff's sale auctions off defaulted or repossessed properties at the end of the foreclosure process. At the auction, members of the public may bid on the seized property, often sold in as-is condition. Sale proceeds pay back the mortgage lenders, banks, tax collectors, and other claimants.

Is Arizona a redemption state?

Arizona is not a redemption/ratification state. In Arizona, a move-out is completed by having a licensed, bonded moving company meet a local sheriff's deputy at the property.

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