In Arizona foreclosure can be completed in less than six months from the time the loan becomes delinquent. The mortgage company can record a Notice of Sale after 90 days. Once the Notice of Sale has been recorded, the foreclosure can be completed in three months but often may take longer due to the lender’s schedule and or a short sale specialist negotiating with the lender.
How Can I Stop The Foreclosure?
The best way to stop the foreclosure is to bring the loan current. To do that you would need to pay all delinquent amounts as well as the costs and fees incurred by the mortgage company to file and process the foreclosure.
Many borrowers are not able to bring the loan current and are forced to look at other alternatives to avoid foreclosure. Even if you are well into the foreclosure process, most lenders are willing to grant you additional time to remedy the situation if they believe it is reasonably likely they can avoid acquiring your property through foreclosure. Among the alternatives the lender might be receptive to: Get the property sold so you can save your equity. If you don’t have equity, cooperate in a Short Sale and accept a discounted payoff as “full payment” on the loan.
What about a loan modification?
We have seen that “if” the lender is willing to negotiate a loan modification they are not reducing the principal of the note but either re-amortizing the loan over 40 years or reducing your payments for a year or two and adding the interest to the balance of the loan. Banks have found that over 75% of these modifications end up back on foreclosure so they are not eager to process them.
What Options Do I Have To Avoid Foreclosure?
There are several things you can do to avoid foreclosure. It is usually best to let your lender know, right away, that you intend to solve the problem so they won’t have to get the property in foreclosure. Here are some of your options:
• Sell Your Property
• Negotiate a Forbearance Agreement
• Do Nothing
If My Lender Forecloses, Can They Come After Me For The Loss?
Yes, Even though Arizona is an “anti-deficiency” state; if your loan doesn’t meet certain criteria, the lender(s) can file a lawsuit or sell your note to a collection agency that will come after you in future years. The lender can also send you a 1099 form which means you will have to declare as income; the difference between the loan balance and the price the home sells at auction. In Arizona it is not uncommon to see borrowers having to pay the IRS thousands of dollars – when this could have been avoided for less than $1,000 by doing a short sale.
Can I Just Deed My Property To Someone And Avoid Foreclosure?
Deeding your property to a third party does not eliminate your obligations related to the loan. Unless the mortgage is paid off when you deed the property, you will almost certainly remain as the party primarily responsible for the repayment of the loan. If the lender eventually forecloses, it will be on your credit record.
If you deed your property to a third party you also give up control of the property. It is nearly always a bad idea to simply deed your property to a third party. Do not deed your property to someone without paying off the loan unless you have consulted with an attorney.
What will a Foreclosure do to my credit?
This will impact your credit for years to come as well as possibly cost you your employment. See the credit tab on this page. By almost any measure a completed foreclosure is the most damaging event your credit status can encounter – worse than bankruptcy. A foreclosure on your credit record will negatively impact your ability to borrow money for years. For most people, it is well worth the time and effort to solve the problem before the foreclosure is done.
Will A Short Sale Stop A Foreclosure?
Something to consider: if you don’t miss any payments, some lenders will give you a mortgage soon after a short sale! While the Short Sale itself does not stop the foreclosure, lenders normally work with a homeowner and delay the foreclosure if necessary, if they receive a legitimate Short Sale proposal. The key here is to submit a complete, well organized, Short Sale proposal. The lender does not want your property, and would rather resolve the situation before the foreclosure is complete.
If My Lender Has Started A Foreclosure, Can I Still Sell My Property?
Absolutely, In fact, your lender would rather you sell the property than allow the foreclosure to continue. Your lender does not want to take your property through foreclosure. Even if you have no equity in the property, the lender wants to find a solution.
This is precisely why lenders agree to a Short Sale and accept a discounted payoff to fully satisfy the loan. In a Short Sale, the lender in nearly all cases pays all the closing costs – including title fees, escrow fees and the real estate commission.
Should I speak with my lender when they call?
It is best that you not avoid calls or letters from your mortgage company, particularly if a foreclosure is pending. Your mortgage company does not want to take your property through foreclosure. The mortgage company would rather look for options to avoid foreclosure.
When speaking with your mortgage company, be honest about your circumstances and listen for them to possibly suggest options. The mortgage company knows the best way for them to limit losses on a delinquent mortgage is to work with the homeowner.
Be sure to keep notes of all conversations you have with the mortgage company including dates and times of calls, the name of the representative with whom you spoke and the details of the conversation. Ready to start the process? Please speak with your attorney and CPA before you decide to do a short sale or foreclosure.