Here is a summary of foreclosure laws and rules for the State of Arizona:
- Both judicial foreclosure and non-judicial foreclosures are available, but the non-judicial deed of trust sale is preferred.
- The trustee cannot conduct a foreclosure sale under the power of sale clause until a lawsuit to foreclose is dismissed. The lender can't do both.
- A deficiency on a purchase money mortgage is not allowed on residential property if a single one-family or single two-family dwelling that is on 2.5 acres or less. See Section 33-814.
- No right of redemption is recognized with a non-judicial foreclosure. With a judicial foreclosure, you can redeem right up to sale unless you've abandoned the property.
- ALERT: A new law is set to go into effect on September 30, 2009. A homeowner will be liable for a deficiency judgment if they haven't in their home for six consecutive months. An article in the July 26 issue of The Arizon Republic by Catherine Reagor discusses the law and the controversy surrounding it.
- You can cure the default (generally, make up missed payments,under a deed of trust (non-judicial foreclosure) up to 5:00 p.m. on the day before the sale date or the date of filing the action to foreclose. See Section 33-813.
- A deficiency is allowed if the value of the house has declined because the homeowner has committed waste (basically, not taken care of the place.)
Here is the relevant portion of the Arizona Statute discussing deficiency:
Section 33.729. Purchase money mortgage; limitation on liability
A. Except as provided in subsection B, if a mortgage is given to secure the payment of the balance of the purchase price, or to secure a loan to pay all or part of the purchase price, of a parcel of real property of two and one-half acres or less which is limited to and utilized for either a single one-family or single two-family dwelling, the lien of judgment in an action to foreclose such mortgage shall not extend to any other property of the judgment debtor, nor may general execution be issued against the judgment debtor to enforce such judgment, and if the proceeds of the mortgaged real property sold under special execution are insufficient to satisfy the judgment, the judgment may not otherwise be satisfied out of other property of the judgment debtor, notwithstanding any agreement to the contrary.
B. The balance due on a mortgage foreclosure judgment after sale of the mortgaged property shall constitute a lien against other property of the judgment debtor, general execution may be issued thereon, and the judgment may be otherwise satisfied out of other property of the judgment debtor, if the court determines, after sale upon special execution and upon written application and such notice to the judgment debtor as the court may require, that the sale price was less than the amount of the judgment because of diminution in the value of such real property while such property was in the ownership, possession, or control of the judgment debtor because of voluntary waste committed or permitted by the judgment debtor, not to exceed the amount of diminution in value as determined by such court.
