Why are there so many Foreclosures in Arizona??
April 8, 2008
Lenders love Phoenix, Arizona (they also love California and Nevada). All states that have some of the highest foreclosure rates in the country…. But why ?? ….
Here is one important reason when it comes to Short Sale or Foreclosure that every buyer should know.
The concept, simplified, is what’s called , Mortgage Theory vs. Deed of Trust Theory.
Most states, use traditional mortgages, which translated from its French origin literally means , “a promise upon death” or a “death pledge”. (scary , huh ?)…
Keep in mind, I am not an attorney and there are variations, other rules and regulations that need to be understood, and interpreted on both of the above if you are preparing for a short sale or going through either of any type of foreclosure. However, this is a boiled down version for a quick definition.
Mortgage theory is generally better for the borrower, worse for the lender, as it has to do with the Foreclosure process. When the borrower does not make timely mortgage payments, the lender invokes an ‘acceleration’ clause and calls the note due.
However, the borrower has options. Borrower can file for bankruptcy delaying the foreclosure proceedings or they can remain in the property and await a “Judical” foreclosure; a process where the lender files suit to foreclose on the lien and order the property sold. This is costly, takes time, and a lot of money to the lender (lost mortgage payment, court costs, etc.) Further, in this process, the borrower has 6 months to redeem the property from the mortgage foreclosure sale.
Areas like Phoenix and the whole State of Arizona, (make sure you check with Kevin Boer 3 Oceans Real Estate about California practice what is called Deed of Trust theory.
Here in Phoenix, we do not have ‘traditional’ mortgages. Deed of Trust foreclosure is a non-judicial process, thus saving time and money, and after a Deed of Trust foreclosure the borrow has no further rights and/or redemption )
Arizona has Deeds of Trust where a 3rd-party trustee holds the title to the property with the power to foreclose on the buyer if there is a default. What this means is that in the case of default by the borrower, notification (can be as early as 7 days from the payment due on the first of the month”) is give to the trustee by the lender and the foreclosure process starts.
Don’t fear, Most of the time, lenders exercise what is called ‘Forebearance’ ;where the buyer is in default , but lender does not immediately foreclose.
Lenders prefer Deeds of Trust , and is a reason (not the only), that money was so readily available and that there are so many foreclosure sales in Arizona (and other Deed of Trust theory states) every day on the local courthouse steps.
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Copyright © 2008 By James Wexler, All Rights Reserved. *Why are there so many Foreclosures in Arizona??*
Contact James Wexler (480) 221-8080 for all your Phoenix Scottsdale area Real Estate needs.
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I have been trying to get a modification for my loan so I could stay in my home I own 275,000.00 House is worth in todays market 175,000.00 or so foreclousure houses in my neighbor hood is selling for this price. I only wanted Country Wide to give me a fixed rate 4.25 instead of an adjustable at 8.85 they are breaking me and they earned in interest in one year 15,000.00 you take 1,000 people and they are getting alot of money and what are they doing with all this money but giving it to their CEO’s and etc. I had to hire someone for 2,750. to help me with my modification and still no word I am now falling behind related to loss of income and the economy. I want to stay in my home. Now what are my options?
Rhonda,
E-mail me I could be a relative and may be able to help.
Rhonda,
If you were born in Chicago, Illinois you may be a relative, contact me.
Phoenix, like Las Vegas had a lot of investors and speculators. Add to that people buying homes they knew they couldn’t afford and you have today’s real estate market.