Important Changes to Arizona Trustee Sale Notices
By: Valerie Marciano, Esq.
Foreclosure, one of the hot economic
topics in Arizona, has some new legal requirements. The
Arizona state legislature passed and the governor signed, House
Bill 2626, which requires lenders and homeowners to explore options
that avoid foreclosure. Two methods of foreclosure are
available to a lender in Arizona - the judicial foreclosure and the
trustee sale process. Judicial foreclosure, rarely used in
Arizona because it is a costly and lengthy process, is a court
proceeding initiated by a lender. HB 2626 does not impact the
judicial foreclosure process available to lenders. Rather, HB
2626 applies when a lender chooses the trustee sale method to
recover the house given as loan collateral.
Current law states that the trustee appointed by a lender has to
comply with certain requirements in the trustee sale process:
- record the notice of trustee sale at least 91 days before the
date of sale;
- mail a copy of the notice to the trustor, (typically the
borrower) within 5 days after the notice of trustee sale is
recorded;
- mail a copy of the notice to those who are shown on the
county records as having an interest in the property or who have
recorded a "request for notice" within 30 days after the notice is
recorded;
- post a copy of the notice on the property in a conspicuous
place at least 20 days prior to the sale; and
- publish the notice in a newspaper in the county where the
property is located and to be sold, at least once a week for 4
consecutive weeks until at least 10 days before the sale to be
held.
The new law, which became effective on July 30, 2010, imposes a
new requirement for lenders holding first lien deeds of trust
recorded from January 1, 2003 to December 31, 2008: At least
30 days before the notice is recorded, the lender must attempt to
contact the borrower to explore options that avoid
foreclosure. The lender must also certify in writing, under
oath, that it complied with the new requirement, or that the new
requirement does not apply in that instance.
The new requirements are inapplicable if:
- loans that are made, purchased, or serviced by a state or
local housing agency, such as the Federal National Mortgage
Association and Federal Home Loan Mortgage Corporation, or that are
collateral for their securities;
- lenders who made 5 or fewer loans in one calendar year, i.e.
many private lenders; and
- lenders who have complied with the U.S. Department of Treasury
Home Modification Program.
The lender still must provide the written certificate that the
requirements imposed by HB 2626 do not apply the proposed trustee's
sale.
The new law does not require a servicer to violate contractual
agreements for investor-owned loans. Nor does HB 2626 require
a loan servicer to provide a modification for a borrower who (1) is
not willing or able to pay under a modification; (2) has
surrendered the property; (3) has filed bankruptcy; or (4) has
vacated or abandoned the property.
If a lender chooses not to comply with the new requirement as a
matter of course in handling its lender portfolio, a careful review
of the requirements should be made to avoid a potential defense to
the trustee sale proceeding. For the borrower who receives
the new notice from the lender, the borrower
should investigate the options afforded to avoid an
impending foreclosure of the home.
About the author: Valerie Marciano is a litigation
attorney at the Phoenix law firm of Jaburg Wilk. She assists
clients with business issues, foreclosures, creditor's rights
issues and anti-deficiency issues. Val can be reached at
vlm@jaburgwilk.com
or 602.248.1025.
3200 North Central Avenue
. Phoenix . Arizona