A Trustee Sale or Home Auction is a non-judicial foreclosure action meaning there are no court proceedings. Although the lender or Mortgage Company retains the right to a judicial foreclosure, most lenders feel it is faster and less expensive to pursue the Trustee Sale. This explanation of the Trustee Sale process will not cover the judicial foreclosure.
Once a homeowner or seller becomes 91 days late on their mortgage, the lender, also known as the beneficiary has the right to begin the foreclosure process. A Notice of Trustee Sale is recorded at the County Recorder’s Office and a copy of the notice is sent to the homeowner as well as anyone else who has an interest in the property. According to Arizona Law, once the Notice of Trustee Sale has been recorded, the Trustee Sale auction cannot occur prior to 90 days from the recording of the notice.
Assuming the homeowner or seller has not reinstated their loan or filed bankruptcy, the Trustee Sale is held either at an attorney’s office or at the courthouse steps. An opening bid, also known as a credit bid is determined by the lender. This is the dollar amount the lender will pay for the property. If an investor or third party does not purchase the property, the property reverts back to the beneficiary. If the investor or third party does not "win the bid", then the home becomes a "bank owned home" also known as a Real Estate Owned home (REO home).
If you are an investor or third party at the Trustee Sale, you must be prepared to have with you a $10,000 cashier’s check made out to the Trustee for each property you intend to purchase. If you do not “win the bid” your check is returned to you. You will be required to pay the entire purchase price of the home in full, the following business day or you will forfeit your $10,000.
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