It’s important to know that Arizona operates as what is called a title theory state – property title remains in trust until your loan is paid off. Legal title is held by your lender, and the borrower/home owner has equitable title (the right to possession and use of the property in the absence of default). In a lien theory state title is held by the borrower and the lender places a lien against the property to secure the debt. Why is this important? Because how title is held determines the foreclosure process (that, and state law). In a title theory state, the foreclosure process is governed by the Power of Sale clause in your load documents. The Power of Sale clause gives the lender the right to sell the property if you default (don’t make the payments). This is also known as a “non-judicial foreclosure”, which means the entire foreclosure process can happen with no court involvement or authority. The vast majority of foreclosures in Arizona are non-judicial in nature. As you may have guessed, a lien theory state requires a judicial foreclosure – the courts have to get involved. This of course makes the process slower and more expensive. So let’s take a look at the steps involved in a non-judicial foreclosure: 1 The home owner goes into default. Technically speaking, a lender could begin the foreclosure process on Day 1 that your mortgage payment is considered late. In reality, that doesn’t happen. Typically it takes several months of missed payments before the lender initiates foreclosure. Why? Basically because they want your money, not your house. So while the harassing phone calls may start early, it’s highly unlikely that a lender will start the foreclosure process on the first missed payment. I know people that have missed payments for a full year before the process gets spooled up. The time can vary wildly by lender, and even the same lender treats borrowers differently. 2. The Notice of Trustee Sale is filed. At some point, the lender will decide to initiate the foreclosure process and they (more accurately, the Trustee) will record a Notice of Trustee Sale (NOS). Some lenders may issue a Notice of Default (or demand) (NOD) prior to a Notice of Trustee Sale as a sort of “final warning” that your home is about to enter the foreclosure process, but NOD’s are not required under state law. There are several rules that stipulate how the NOS is handled. It must be recorded at the county recorder’s office. It must be advertised once a week for four consecutive weeks in a local newspaper (the last “advertisement” must be published not less than 10 days prior to the date of the sale). The notice must be posted, either at a conspicuous place on the property, at the courthouse, or the trustee’s place of business. Finally, within five days of the recording of the Notice of Trustee Sale, a copy must be mailed via certified mail to the property address (the mailing or the posting on the property is often when tenants find out the home they are renting is going into foreclosure). The Notice of Trustee Sale will specify where and when the property is to be sold “at auction”. Sometimes the sale takes place “on the courthouse steps”, and sometimes it is at the trustee’s office. By law, the sale must take place at least 90 days after the notice is recorded. (Of note, trustee sales are often postponed, but they can not occur less than 90 days after the NOS is recorded. Redemption Period. Poke around on the internet and you will see mention of “redemption periods” – a time period where a home owner can catch up on their loan and get their home back. In some states this can happen even after the home is sold at foreclosure. (Alabama has a 12 month redemption period.) In a non-judicial foreclosure (again, this is the vast majority of foreclosures in Arizona) there is no redemption period. A home owner can make their loan current at any time prior to the actual sale and stop the process. But once the gavel drops at the trustee sale, the deal is done and the home owner has no further opportunity to retain their home. 3 The Trustee Sale. At the stated time and location, the home goes up for bid. Often no bids are made, or the minimum bid is not made and the home will revert to the lender. At that point it becomes an “REO property” (Real Estate Owned) aka a “bank owned home” or (technically erroneously) a “foreclosure”. The bank will at some point put the home up for sale on the open market. It can take anywhere from a few days to several months before a bank will place a property on the market. If a bid above the minimum is made, then the high bidder is required to provide a non-refundable $10,000 cashiers check on the day of the sale and pay the balance by 5:00pm of the next business day. In other words, if you want to bid on “foreclosures” you need a large wallet. Homes are also sold “as is” meaning just what it sounds like – what you see is what you get — and it is often difficult to inspect the interiors of homes before trustee sales. Buying foreclosures at auction is not for the faint of heart. You need to know what you are doing. You will not get homes at auction for pennies on the dollar. Banks may be evil, but they aren’t stupid. 4 Trustee’s Deed. Within seven business days of receipt of payment, a Trustee’s Deed will be issued to the purchaser. The property is not “in limbo” during this time period. The high bidder owns the property once the bid is paid in full. Of note, the home owner is also responsible for the property during the 90 day trustee sale notice period. If you trash out your home, or take the appliances, cabinets, flooring, etc. prior to the trustee sale, you are breaking the law and can be held responsible for damages. It’s not a terribly complicated process, but it is often misunderstood by home owners and real estate agents alike. Compounding the confusion is that foreclosure laws and procedures vary from state to state. For Information Please Call 602-488-1349 ...read more

Independent Trustee Services If you have a trust or are considering establishing one, the choice of a trustee is highly important. Trustees must have the skills to handle the technical matters that arise, including taxation, trust administration and asset management. They also need to be able to serve the lifespan of the trust, which could span generations. Furthermore, these actions must be done according to the specific document provisions and laws governing your trust. Ron Herb Trust specializes in providing independent services. Deciding on a trustee can reduce possible personal conflicts within your family or among beneficiaries while ensuring the continuity of oversight for the life of your trust. By choosing Ron Herb Trust Services, you can rest assured that we will work on your behalf to carry out all the tasks as defined in the trust in accordance to your financial instructions. Benefits of Hiring a Trustee Avoid conflicts of interest Confidentiality of sensitive family financial information Independent&objective plan advice Regulatory & compliance reporting Ease of overall administration Providing consolidated asset & income statements Processing receipts & disbursements Preparing required tax forms Definition of ‘Trustee’ A person or firm that holds or administers property or assets for the benefit of a third party. A trustee may be appointed for a wide variety of purposes, such as in the case of bankruptcy, for a charity, a trust fund or for certain types of retirement plans or pensions. They are trusted to make decisions in the beneficiary’s best interests. ‘Trustee’ A trustee is required to uphold a strong level of integrity and impartiality in conducting its duties. Typically, a trustee is not permitted to benefit or profit from its position unless the trust document specifically allows for payments to the trustee for providing services. Often, a trustee may have a fiduciary responsibility to the trust beneficiaries.   For Trustee Service Information Please call 602-488-1349 ...read more

Nationally, foreclosure activity continues to decline, according to RealtyTrac, an Irvine, Calif.-based foreclosure listing site. In March the number of filings fell 1% from February and 21% from a year earlier, and home repossessions hit their lowest level in five and a half years. The national level declines have been driven by dramatic decreases in areas long considered foreclosure hot spots like California, Arizona, Georgia andMichigan. States With The Largest Increases In Foreclosure Starts In MarchThe marco-level data sound very promising. But dig deeper into RealtyTrac’s first quarter report and you’ll also find that a handful of states are actually bucking that recovery trend, experiencing dramatic jumps in the number of homes facing foreclosure.“Overall we are continuing to see a downward trend nationwide with 30 straight months of year-over-year decrease in activity,” says Daren Blomquist, vice president of RealtyTrac. “That said,  there are still these problem spots that are continuing to see foreclosure flare ups, including areas where it didn’t seem to be a problem in the past.” In the first quarter of 2013, 11 states experienced increases in foreclosure activity compared to a year earlier. Maine experienced the most dramatic jump: a 327% increase in filing activity. Other states where foreclosures surged by triple digits were Arkansas (150%), Maryland (123%), Washington(126%), and New York (114%).One of the biggest factors behind the increases is a renewed wave of starts, or the initial filing of the foreclosure process on a defaulted mortgage that kicks off the process. In New York state starts have surged 200% compared to last year. In Washington they’re up more than 150% over the same period. Maryland has seen a 194% jump, and Arkansas, 101%.While it points to another wave of foreclosures in these states, the new filings aren’t reflective of a new batch of defaulting homeowners as much as they are indicative of the delays lenders have faced in terms of processing backlogs of defaults. “Everything we see is pointing to that case as opposed to new distressed inventory from homeowners falling into delinquency recently,” notes Blomquist. “These are homeowners that fell into trouble a year or two ago and are finally getting processed as foreclosures.”Why such delays? Regulations. In many states, like New York for example, the delays stem from the fact that a foreclosure must go though the court system in a judicial review. Judicial foreclosure states have experienced prolonged foreclosure activity in response, with foreclosures in states like New York, New Jersey and Florida averaging a staggering 1,049 days, 1,002 days and 893 days accordingly.State Laws Increasing Non-Judicial Timelines In Q12013 ...read more