You Received a Trustee Sale Notice. What Happens Next?

Opening your mail and finding a Notice of Trustee’s Sale can be frightening. For many Arizona homeowners, the first reaction is panic: Am I losing my house? How much time do I have? Is it already too late?

The most important thing to understand is this:

A Trustee Sale Notice does not mean your home has already been sold. But it does mean the situation has become serious, and waiting can dramatically reduce your options.

What Is a Trustee Sale?

In Arizona, many home loans are secured by a Deed of Trust. If the borrower defaults on the loan and the lender moves forward with foreclosure, the lender may use Arizona’s nonjudicial trustee-sale process.

The trustee records a Notice of Trustee’s Sale, which establishes the date, time and location of the proposed auction.

Under Arizona law, the scheduled sale date generally cannot be sooner than the 91st day after the Notice of Trustee’s Sale is recorded.

The notice process also includes requirements for mailing, posting and publication. Arizona law requires the notice to be published once a week for four consecutive weeks, and the property is generally posted at least 20 days before the scheduled sale.

That means you have a timeline — but you do not have unlimited time.

First: Don't Ignore the Notice

One of the biggest mistakes a homeowner can make is putting the notice aside because dealing with it feels overwhelming.

Ignoring it doesn't stop the clock.

Instead, find the actual scheduled trustee-sale date on the notice. Keep the notice and every piece of correspondence from your mortgage servicer, lender and trustee.

Then start determining what options are available to you.

Option 1: Can You Bring the Loan Current?

Depending upon the circumstances, reinstating the mortgage may be possible.

This generally means paying the amount necessary to cure the default, along with applicable fees and costs.

Arizona law provides borrowers certain reinstatement rights before a trustee sale under A.R.S. §33-813. Your mortgage servicer or trustee can provide information about the amount necessary to reinstate the loan.

Don't assume you know the amount based simply upon the number of missed mortgage payments. Get the actual reinstatement figure.

Option 2: Contact Your Mortgage Servicer

If keeping the home is your goal, contact your mortgage servicer immediately and ask about available loss-mitigation options.

Depending upon your loan, financial situation and servicer, possibilities could include a repayment arrangement, loan modification, forbearance or another workout option.

There are no guarantees that you will qualify, but you cannot evaluate an option you haven't investigated.

The Arizona Attorney General recommends contacting your mortgage servicer as soon as you realize you are having difficulty making your payments. It also recommends working with a HUD-approved housing counselor, which may provide foreclosure-prevention counseling at little or no cost.

Option 3: Sell the Home Before the Trustee Sale

This is where homeowners sometimes misunderstand their situation.

Receiving a Trustee Sale Notice does not automatically mean you cannot sell your house.

If the property has enough equity to pay the mortgage, liens, closing expenses and other obligations, a traditional sale may allow you to pay off the loan and potentially walk away with your remaining equity.

But time becomes extremely important.

You need to know:

What is the home realistically worth?

How much do you owe?

Are there additional liens against the property?

What is the scheduled trustee-sale date?

How quickly could the property realistically be marketed and closed?

This is not the time for an unrealistic listing price and a "let's see what happens" marketing strategy.

If selling is the solution, the property needs to be priced and marketed with the trustee-sale deadline in mind.

Option 4: What If You Owe More Than the Home Is Worth?

That doesn't necessarily mean there are no options.

A short sale may be worth investigating.

In a short sale, the lender is asked to accept less than the total amount owed in order to allow the property to be sold.

The lender must approve the short sale, and approval is never automatic. It can also take time.

That is another reason homeowners facing a trustee sale should investigate their options as early as possible.

If the sale date is approaching, there may simply not be enough time to complete the necessary process unless the lender agrees to postpone the trustee sale.

Be Careful Who You Trust

Unfortunately, homeowners facing foreclosure can become targets for people promising to "save" their homes.

Be especially cautious if someone asks you for substantial upfront money, pressures you to sign documents immediately, promises that they can guarantee the foreclosure will stop, or asks you to transfer ownership of your property.

The Arizona Attorney General specifically warns consumers about foreclosure-rescue schemes and advises homeowners not to sign over the deed to their property unless they knowingly intend to sell it for a fair price.

Your financial distress should never become somebody else's opportunity to take advantage of you.

What Happens If the Trustee Sale Actually Occurs?

If the situation isn't resolved and the sale isn't postponed or stopped, the property can be sold at public auction on the scheduled trustee-sale date.

Arizona's Notice of Trustee's Sale contains an especially important legal warning: if a homeowner believes there is a legal defense or objection to the sale, Arizona law requires court action and an order stopping the sale no later than 5:00 p.m. on the last business day before the scheduled sale, or certain defenses or objections may be waived.

If you believe the foreclosure is improper or you have a legal defense, contact a qualified Arizona attorney immediately.

A REALTOR® cannot provide legal advice or stop a foreclosure through legal action.

The Most Valuable Thing You Have Right Now May Be Time

When I speak with homeowners facing a possible trustee sale, my first objective isn't to pressure them into listing their home.

It is to help determine whether selling the property is a realistic option.

Sometimes keeping the home may be the best solution.

Sometimes selling may allow the homeowner to protect substantial equity.

Sometimes a short sale may need to be explored.

And sometimes the homeowner needs an attorney, HUD-approved housing counselor, CPA or another professional rather than a REALTOR®.

But almost every available solution has one thing in common:

It becomes more difficult when you wait until the last minute.

You Have a Trustee Sale Date — Let's Find Out What Your Home Is Worth

If you have received a Notice of Trustee’s Sale on a property in the Tucson Metro area, you don't have to guess about the property's value or whether selling could be an option.

I can help you evaluate the home's current market value, estimated selling expenses and approximate equity position so you have better information before deciding what to do next.

No promises. No scare tactics. No sugarcoating.

Just the information you need to make an informed decision while you still have time to make one.

Wes Stolsek,

REALTOR®

OMNI Homes International

520-404-9773

www.wesleystolsek.com

This article is provided for general real estate information and is not legal, tax or financial advice. Foreclosure and trustee-sale situations can involve important legal rights and deadlines. Homeowners should consult their mortgage servicer and appropriate legal, tax, financial or HUD-approved housing-counseling professionals regarding their individual circumstances.