◙
Foreclosure "Rescue"
Schemes and Scams
◙ How
does a Lender start a Trustee's Sale?
◙
Information
the Lender must provide our firm in order for us to start a
Trustee's Sale
◙ Information
for homeowner's facing the loss of their home.
w When a
Trustee’s Sale May Be Used
w
Steps the Lender Must Take to Seek a Sale of Your Home
◙
Arizona
Trustee's Sales and Bankruptcy
◙ Options
to Avoid a Trustee's Sale
w
What you can do if you are able to catch up on payments.
◙ Very
Important if you have a VA loan
◙
Laws that Protect our "Active Military"
◙ A
Trustee's Sale has now been recorded - what are the
homeowner's options?
◙ How
do I get information about paying the arrears so that the
sale will be stopped?
◙ Getting
Information About the Credit Bid
◙ Making
bids at the Trustee Sales
◙ Paying
the Bid Amount
◙ What
if the highest bidder at the sale fails to pay his bid
amount
◙ Postponement
of a Trustee Sale
◙ What
if a Bankruptcy is filed before the Sale is Completed?
◙ What
is a Trustee's Deed?
◙ When
Does the Investor Get the Trustee's Deed?
◙ What
happens after the sale if I still live in the property?
◙
How do I get a temporary restraining order to stop the sale of
the property? (The court will require that you have
proof that the law has not been followed)
◙
What are excess
sale proceeds (monies left after a trustee's sale)?
How
does a Lender start a Trustee's Sale?
Complete the
client
information form and forward to our office. You will be
provided with a retainer agreement and an instruction letter, plus
copies of documents that must be signed and notarized. Sign the
letter and return the notarized documents, along with your retainer, to
our office. We will then send a demand letter, order the title
report and start the trustee's sale process.
Information for homeowner's facing the loss of their home
Foreclosures, a key indicator of
the health of the home lending market are skyrocketing,
harming families and their communities. When compared
to any other relevant measure - increases in homeownership,
increased in number of mortgage loans, even the ratio of
foreclosures per mortgage - the rate and number of
foreclosures is escalating at an alarming pace. Over
the last two decades homeownership has increased b7y only
3.6%, but foreclosures per home have increased by 335.6%.
The blame for this dramatic increase in foreclosures can be
traced directly to the subprime (hard money) mortgage
market. As of the third quarter of 2003, 6.6% of
subprime mortgage loans - approximately one in every 15
loans - were in foreclosure. This stands in stark
contract to the rate for prime loans - 53% for the same
period. by
Joint Center for Housing Studies (March 2004), page 12.
The sad truth is that very few
borrowers understand the issues related to borrowing money,
purchasing homes, or using credit cards. IN stead they
rely on the word of those who make money as a result of
their lack of knowledge - realtors, brokers, lender, credit
card companies. Their failure to understand these
issues is leading them directly into foreclosure,
garnishment and bankruptcy.
When a Trustee’s
Sale May Be Used
If you bought
a home and signed a Deed of Trust giving a lender a
security interest in your property, the lender can start a
process to take legal action to sell the property at a
Trustee’s Sale.
The legal
process can be started if you are in default–if you do
not do what you agreed when the loan was given. Usually this
happens if you are behind on your payments. It also could
happen if you fail to pay your property insurance or real
estate taxes on the property or don’t maintain the property.
Steps the Lender Must Take to Seek a Sale of Your Home
Usually, the
lender (person or company that loaned the money for you to buy
your home or a company that later takes over the mortgage)
will make a demand that you make your payment. Usually this
is required in the agreement.
You should
know that, if the lender sends this notice by certified mail,
the process of forcing sale of your home can continue
even if you do not pick up the certified letter.
Options to Avoid a
Trustee's Sale
What you can do if you are able to catch up on payments.
If you can
afford to catch up on your payments, it is best to do this as
soon as possible. If your lender has to take other legal
steps, you will end up paying for all of the costs, so it will
cost you much less if you can stop the process at this point
by paying what you owe.
If possible,
work out a plan to catch up on your payments. Contact the
lender to see if you can reach agreement about how much you
will pay and when to catch up. You are more likely to be able
to get agreement on a repayment plan if you show that you are
receiving a lump sum of money soon or that your income will be
going up soon so that you can afford to catch up and then keep
making your payments on time in the future.
If you reach
an agreement with the lender on a repayment plan, be sure
that the repayment agreement is in writing. You should
send a letter the lender to confirm that they have agreed to
accept payments instead of taking other legal action and the
amounts and dates of the payments. Include in the letter the
name and phone number of the person who agreed to the payment
by phone. It is best to send the letter by certified mail
and keep a copy.
If your mailing address has changed, you should
be sure that your lender knows how to notify you so you are
notified if the home is scheduled to be sold. Even if
you have given your lender this information in writing it is
still very
important that you also record a
Request for Notice with the County Recorder's office – in
the County where your home is located.
If you are able to reach an agreement with the lender to
catch up on your payments, be sure to make all of the payments
on time as you agreed and keep proof that you made the
payments.
Consider ways you may be able to get additional funds to be
able to catch up on your payments. Someone in the family may be able to get a job or a second
job. Sometimes people are able to borrow from relatives. If
you can make arrangements, provide your lender with written
evidence that your family can now afford the house payments.
This could be a written agreement to rent out part of the home
that shows how much rent will be paid to you, or a family
member’s pay stub to show increased income. If a relative
agrees to loan you money, you can get this agreement in
writing.
If you have a VA loan,
it is especially important that you attempt to work with
the VA to avoid possibly being responsible for the full loan
amount even if your house later sells for less than you owe
and to see if you can remain eligible for a VA loan in the
future. This is not something to be taken lightly - your
VA benefits, pay checks, checking accounts and tax refunds can
be taken if you fail to pay a VA loan. Bankruptcy is a
solution to this problem.
Laws that
Protect our "Active Military"
MILITARY
RELIEF ACT A 2003 Law Provides Relief For Military
Personnel. (unknown author)
Borrowers -- whether for mortgage loans, credit card debt or
auto loans -- who have been called up for military duty have
been given greater financial and legal protections. On
December 19, 2003, President Bush signed into law the
"Service members Civil Relief Act" (SCRA).
Under this new law, "Service members" are defined as persons
on active duty in the military, but also includes National
Guard members who have been called up for active duty for
more than 30 days. If yourself or a family member have
been called into active duty, all of your lenders should be
immediately notified, and you must send them a copy of the
military orders. Once the lender has been put on notice, it
must reduce all interest payments down to six percent, and
most importantly, must forgive all pre-service debts which
exceeded this six percent cap. It should be noted that this
protection applies only to debts incurred before the
borrower went into active military service; debts incurred
while on active duty are not similarly protected.
Since the start of World War II, there was a law known as
the
Soldiers and Sailors Civil Relief Act of 1940. That law
also required lenders to automatically reduce the interest
rate obligations of persons in active military service down
to six percent. However, it was not clear that all interest
above the six percent cap was to be forgiven. SCRA clarifies
this, with clear language in Section 207 of the Act that
"interest at a rate in excess of six percent per year ... is
forgiven." The old Soldiers and Sailors Relief Act was a
very powerful tool designed to assist servicemen and women
whose income is less while on active duty than what it was
in civilian life. However, that law was enacted over 60
years ago, and times have changed. Additionally, various
Court cases have given different -- and often conflicting --
interpretations of that old law. Accordingly, Congress
decided to update and clarify the rights of our service men
and women.
The stated purpose of SCRA is: To provide for, strengthen,
and expedite the national defense through protection
extended by this Act to service members of the United States
to enable such persons to devote their entire energy to the
defense needs of the Nation; and to provide for the
temporary suspension of judicial and administrative
proceedings and transactions that may adversely affect the
civil rights of service members during their military
service.
It should be noted that the reduction in the interest rate
must be accompanied by a reduction of the monthly payment.
The lender cannot require you to continue to pay your same
payment each month, and credit more toward principal. In
addition to mortgage and other debt payments, the new law
provides other important relief to the men and women in our
Armed Services.
Leases: If a lease was entered into prior to the tenant's
entry into the armed services, the tenant has the right to
terminate it, even before the term has expired. Members of
the military who receive orders for a permanent change of
station or to deploy with a military unit for a period of
not less than 90 days also have the right to terminate
leases, even if the leases were entered into while they were
on active duty. The landlord must be given thirty days
advance notice of the termination, and rent must be paid up
to the date the lease ends. There is no longer a requirement
that the lease contain a military termination clause.
Rent: Military personnel -- as their civilian counterparts
-- must continue to pay rent if the lease is not terminated.
However, the Act does provide some protection from eviction.
Only a court can order the eviction of the tenant. (Note:
this is the law in many states anyway. A landlord generally
cannot exercise self-help by evicting a tenant without first
obtaining Court approval.) If the Judge determines that the
military service has materially affected the ability to pay,
the Court must stay (stop) the eviction for a period of
three months, unless the Judge finds that "justice and
equity require a longer or shorter period of time." There
are three basic requirements imposed by the law:
The landlord is attempting to evict a person who is in
military service; The leased premises are used for
residential housing by the spouse, children or other
dependents of the military person, and
The agreed upon rent does not exceed $2465 per month. It
should be noted that the older law had a threshold of
$1,200. The new law provides a formula for increasing the
ceiling based on an inflation index. Since this is a complex
issue, tenants who are on active military service must
consult with the legal assistance attorney assigned to their
unit.
Insurance: The private life insurance policy cannot lapse,
terminate or be forfeited for nonpayment of premiums for a
period while the insured is on active duty, plus one year.
Garnishments and Attachments: On the request by the military
person -- or the Court on its own -- may stay or vacate any
attachments or garnishments against the debtor during the
period of active duty plus up to 90 days after that duty
ends.
Legal Representation: Under certain circumstances, when a
lawsuit is brought and the Court determines that the
Defendant is on active military duty, the Court cannot enter
a judgment until after the Court appoints an attorney to
represent the interests of the service member. There is an
interesting sentence in the new law, to the effect that 'if
an attorney appointed ... to represent a service member
cannot locate the service member, actions by the attorney in
the case shall not waive any defense of the service member
or otherwise bind the service member." In other words,
Lenders beware: if your borrower is on active military duty,
your best option is to refrain from filing a lawsuit until
his/her service has ended. Thus, the new law extends -- and
expands upon -- the protections which Congress initially
provided to the men and women who served during World War
II. Our service members should devote their energies to
their military tasks and not have to worry about their
creditors.
A Trustee's Sale has now been recorded - what are the homeowner's
options?
If you are not able to get caught up on your
house payments, the lender can start plans to sell the home by
recording a Notice of Trustee’s Sale & Substitution of Trustee
with the County Recorder’s office. This Notice sets the
date, time and location that the Trustee’s Sale of your home
will take place. You should receive a copy of this Notice of
Trustee’s Sale and a Statement of Breach by certified mail.
This Notice MUST give at least 90 days between
the date the notice is recorded and the date the sale will
happen.
1. Get
advice from a Lawyer. Talk with a lawyer to find out
more about your options and get advice. You may be able to
hire an attorney to advise or assist you. If you have low
income and are eligible for free legal assistance, contact
Community Legal Services at 602-258-3434 to apply for
advice from the Volunteer Lawyers Program. If you are not
eligible for free advice and do not know a lawyer, you can
contact the Lawyer Referral Service of the Maricopa
County Bar Association at 602-257-4434 and get a half hour
consultation with a private attorney for $35. (You can ask to
meet with an attorney who does real estate law.)
2.
DO NOT PAY MONEY TO
SOMEONE ELSE TO NEGOTIATE FOR YOU WITH YOUR LENDER. SOME
PEOPLE TAKE YOUR MONEY AND MAKE PROMISES THAT THEY DON’T KEEP.
3.
Pay the amount that you owe if
you can afford to pay the full amount including back payments,
late charges, penalties and trustee fees BEFORE the
date of the Trustee’s Sale. Ask in writing for the
“reinstatement” amount and keep a copy for your records. Send
the full amount by certified mail, return receipt requested
(arranged at the Post Office) so you can prove that you sent
the money and that the lender received it. IF YOU PAY ALL
THAT YOU OWE, BE SURE THAT YOU HAVE IN WRITING FROM THE LENDER
AND TRUSTEE THAT THE TRUSTEE’S SALE HAS BEEN CANCELLED.
If you have trouble getting the lender to tell you the
exact amount that will be due on the date you can pay it, get
help from a lawyer.
4. Refinance if
you can qualify for the amount you owe including the past due
mortgage payments. If you are able to refinance, the
arrangements need to be made and documents signed and your
lender paid before the date that the Trustee’s Sale is
scheduled to happen. Contact several mortgage companies to
see if you can qualify. It can be difficult or impossible to
get refinancing if you are behind on your payments (in
default) already.
5. DO NOT AGREE TO A SHORT TERM LOAN AT HIGH
INTEREST UNLESS YOU ARE ABSOLUTELY SURE THAT YOU CAN MAKE THE
PAYMENTS AND WILL BE ABLE TO SAVE THE HOME LATER.
Usually it is a mistake to get a short-term loan at high
interest because the payments will be too high, your debt will
increase, and the home will still be lost.
6. Sell your home
yourself before the date scheduled for the Trustee’s Sale.
Even though a Trustee's sale has been started you still own
your home and can sell if. If your home will sell for
significantly more than you owe, this option can allow you to
pay off the mortgage and costs and also get some money you can
use to arrange another place to live and pay moving costs.
Check with several reliable realtors and get a realistic
estimate of the amount you may get if you sell the home.
Always
talk to a licensed realtor that you contact using references
from others. Never use the services of someone who
knocks on your door to "help" you. It is amazing the
number of times that I see homes in a trustee's sale and
there is plenty of money to pay off all the loans, plus
leave lots for the homeowners. Most likely the problem
is that the homeowner does not really know what their home
is worth. Again - use a licensed realtor who you
contact, not who contacts you.
7.
Foreclosure "Rescue"
Schemes and Scams: The likelihood of someone contacting you with a offer to
"solve your problems" without them making lots of money, or
taking title to your home is very rare. Most of these
people are in the business to make money off of your misery.
So long as you understand that is their goal, then do as you
please. The problem is that hundreds of people are
lead to believe these "rescuers" are their friends.
Never make that mistake. Check them out with the
Attorney General's Office, Better Business Bureau, the Clerk
of the County Court for prior lawsuits and run their name on
Google. If they say their are a non-profit - doubt
them. If they state that they have federal "grants"
- doubt them. Document everything you do with them.
Video tape their promises and keep copies of all documents.
Never sign anything without first reading it and make sure
to keep a copy of everything. Before signing - ask for the advice of someone who is not related to the
rescuer.
Most of these scams are visited on
the minorities, those who have low income and cannot afford
to talk to attorneys, and those who are just too stubborn to
believe that anyone could possibly rip them off. We
have an east valley attorney who says that her company is a
non-profit organization called Reach for My Home.
There are now State Bar complaints filed against this
attorney. See below for more information on
Reach for My Home, and its
affiliates.
No one should never rely on anyone
to "work out your problems." It has been my
experience that people in trouble wait far too long to look
for help. When they finally do seek help they fail to
take the time to investigate the credibility of the helper's
history, or the voracity of their claims. Stay involved with your
lender directly. No contract with an attorney should
prohibit you from talking to another attorney or seeking
help for your situation from someone else. Contact the
State Bar of
Arizona if you have any questions about the actions of
any attorney. Bankruptcy is not always an answer.
Make sure to contact an experienced bankruptcy attorney to
determine the options. In the Olsen's case, even if
the house sells in a trustee's sale it is possible that they may actually get
some money after the trustee's sale is completed. See
below for an explanation of monies that are left over after
a trustee's sale - called
excess sales
proceeds.
If you are asked to so something
that you feel is sneaky or wrong, then don't do it.
This is one of hundreds of similar stories: in early 2006
- Maria E, an elderly woman, she used her own money
to put a down payment on a house for $175,000, paid all the
payments and landscaping. Originally, in order to qualify
for the loan (she was living on social security) a realtor
and a mortgage company suggested that she use the credit a
friend of the realtor
to
purchase the house.
(For those paying attention this is called FRAUD.) The
house was purchased in the name of the realtor's friend.
The promise was that the realtor's friend would deed the
house to Maria after the loan was funded.
Maria
paid the down payment and
made all
the payments for some time, thinking that the house had been
deeded into her name. Instead it turned out that the
friend deeded the house to an investor who then evicted
Maria from her own home and deeded it to another investor.
See
Investing in Foreclosures for the names of folks who
work in this area. This article could not possibly
identify all the investors, nor am I implying that they are
all doing something wrong. They are in the business to
make money. The money they are making is the equity in
the home that you are losing.
Here is a copy of an e-mail I received. This shows you
the extent that these companies will go to cloak their real
identity:
"I was concerned about a
company I have seen advertising on the internet to save
peoples homes. After checking with the BBB their
business name, CSG or Consolidated Solutions Group does
not come up. However I did check their mailing address
that they advertise, and it took me to
www.usa2me.com which
is a mail forwarding service. I checked their fax number
which showed that (206) 337-1192 is a land line based in
Seattle, WA. After checking their toll free number it
came up as this: Us Foreclosure Prevention Dba Onclick
Networks LLC
561 Broad St, Newark, NJ 07102-4503, (888) 681-9844
Is this normal for a reputable company helping
homeowners not use a verifiable, valid address but a
mail forwarding service that is located in Houston,
Texas, a fax number that is a land line in Washington
and their toll free number comes up as being located in
New Jersey?"
How do I get
information about paying the arrears so that the sale will be
stopped?
The law is very specific as to what the property owner's
rights are and what the trustee must do with regards to
accepting payment to cure all the arrears. These rights
also apply to all junior lienholders. There are some
very specific steps to follow In order for the lender/servicer
to provide the property owner with the exact amount necessary
to cure the arrears. DO NOT WAIT UNTIL THE LAST MINUTE
TO REQUEST THIS INFORMATION - IT WILL MOST LIKELY TAKE TWO
WEEKS TO GET THE AMOUNTS DUE.
First you must contact the lender/servicer/trustee (perhaps
all three) in writing and request a reinstatement through and
including a specific date. Make sure that date at a time
when you are certain that you can pay the total amount owing
at that time. Include a request for them to identify
where you should make the payment and what form (cashier's
check).
If
you do not receive a response in 72 hours then send another
request (this is not the law, just a suggestion). Keep sending requests every 3 days until you
receive a response with the information that you requested.
Keep copies of each demand in case you need them later to
prove how difficult the lender/servicer/trustee has been to
deal with. If the lender/servicer/trustee does not
respond after four or five demands then immediately file a
complaint with the Arizona
Department of Financial Institutions.
Go the the
Arizona Corporation Commission's web site and find the
shareholders for each of these entities. Send each of
the shareholders a certified demand for information, along
with the copy of the complaint that you have filed. If
the Trustee is a lawyer than file a complaint with the
State Bar of Arizona.
You can also
contact the Consumer Fraud division of the
Attorney General's office (602) 542-5763. You can also
contact your
State Representative (602) 542-3032 and let them know that
the Trustee is refusing to provide you with information so
that you can save your home. Beware - filing
any of these
complaints will normally not
stop or terminate the trustee's sale, but it will definitely get the
attention of the Trustee.
Lastly, if the trustee or the
lender is not responding to your requests for payoff or
reinstatements, or it doing something "shifty", then you have a right to file
for a temporary restraining order
(see attached form) in court.
A "Temporary Restraining
Order" is ordinarily issued after an "ex parte
appearance" (an appearance in court by one party without the
other being present). The Temporary Restraining Order is an
order of the court that states that a person is to stop do
something (in this case completing the trustee's sale).
A
Temporary Restraining Order becomes effective only once it has
been served on the Trustee so they have notice and an
opportunity to be heard by the Court. Then an "Order to Show
Cause" hearing is scheduled so that both parties will have the
opportunity to explain to the court the reasons why a more
"permanent" restraining order should or should not be issued.
This is a good time for you to present your evidence that the
Trustee has not provided you with the amount you need to pay
to stop the sale, but you also must show evidence that you
have the necessary money to pay all the back mortgage
payments, plus fees and costs.
Temporary Restraining Orders usually can be issued the same
day they are requested and remain in effect until the
scheduled hearing on the Order to Show Cause. The Order to
Show Cause hearing is typically scheduled to occur within 15
or 20 days.
Once the
Temporary Restraining Order and Order to Show Cause have been
served on the person to be restrained, a hearing can be held
to determine whether there is sufficient cause for a court to
issue a more "permanent" restraining order. Based upon the
evidence presented at this hearing, a court can order the
restrained person from engaging in certain acts (completing
the trustee's sale until they give you the information
requested). After a hearing, a Restraining Order can remain in
effect for a period of time, even several years. This
Restraining Order After Hearing can also be renewed for
additional periods of time upon application by the protected
person, and its duration may become permanent.
Once you have received the
accounting then make arrangements to pay the full amount.
Remember that the longer you wait to pay the more the late
charges and other penalties you incur. Keep copies of
all correspondence, keep diary of whom you talked to and when.
Confirm all verbal communications by sending a letter, fax or
e-mail detailing your understanding of the agreement.
The following is the law governing
reinstatement and cancellation of trustee sales (at least at
the time of writing this article. You must check the
actual links for any updates):
33-813.
Default in
performance of contract secured; reinstatement; cancellation
of recorded notice of sale
A. If, prior to the maturity date fixed by the contract or
contracts, all or a portion of a principal sum or interest of
the contract or contracts secured by a trust deed becomes due
or is declared due by reason of a breach or default in the
performance of the contract or contracts or of the trust deed,
the trustor or the trustor's successor in interest, any person
having a subordinate lien or encumbrance of record thereon or
any beneficiary under a subordinate trust deed may, before
5:00 p.m. on the last day other than a Saturday or legal
holiday before the date of sale or the filing of an action to
foreclose the trust deed, reinstate by paying to the
beneficiary, the trustee or the trustee's agent in a form
acceptable to the beneficiary or the trustee the entire amount
then due under the terms of the contract or contracts or trust
deed, other than the portion of the principal as would not
then be due had no default occurred, by curing all other
defaults and by paying the amounts due under subsection B of
this section.
B.
The beneficiary shall notify the trustee in writing of the
performance and the name of the person who performed the
conditions. The proceedings shall be cancelled and the
contract or contracts and trust deed shall be deemed
reinstated and in force as if no breach or default had
occurred upon performance of those of the following which may
be applicable:
1.
Payment of the entire amount then due.
2.
Payment of costs and expenses incurred in enforcing the terms
of such contract or trust deed.
3.
Payment of the recording fee for a cancellation of notice of
sale.
4.
Payment of the trustee's fees, in an amount not to exceed six
hundred dollars or one-half of one per cent of the entire
unpaid principal sum secured, whichever is greater.
5.
Payment of expenses and reasonable attorney fees that are not
otherwise provided for in this section and that are incurred
in protecting and preserving the beneficiary's interest in the
trust property.
C.
Upon request, the trustee shall provide to the trustor, or any
person entitled to notice pursuant to section 33-809,
subsection B, at any time that the trust deed is subject to
reinstatement, a good faith estimate of the sums which appear
necessary to reinstate the trust deed, separately specifying
costs, fees, accrued interest, unpaid principal balance and
any other amounts which are required to be paid as a condition
to reinstatement of the trust deed.
D.
If the trust deed is reinstated as provided in subsection B of
this section, the trustee shall have a cancellation of the
notice of sale recorded in the same county recorder's office
where the notice of sale was recorded. A trustee who, for
thirty days after reinstatement, fails to have proper notice
of the cancellation of the notice of sale recorded is liable
to the person who performed the conditions resulting in
reinstatement for all actual damages resulting from such
failure.
E.
If the trust deed is paid in full or if the sale is not held
or is not properly postponed pursuant to this chapter, the
trustee shall record a cancellation of the notice of sale. The
cancellation of the notice of sale shall be recorded in the
office of the county recorder in which the notice of sale was
recorded.
Getting Information
About the Credit Bid:
A.R.S. Section 33-809(E)
requires that a no sooner than thirty days after recordation of the notice of
trustee's sale, the trustee shall upon receipt of a written request, provide, if
actually known to the trustee, the following information relating to the
trustee's sale and the trust property:
1. The unpaid principal balance of
the note or other obligation which is secured by the deed of
trust.
2. The name and address of record
of the owner of the trust property as of the date of
recordation of the notice of trustee's sale.
3. A list of the liens and
encumbrances upon the trust property as of the date of
recordation of the notice of trustee's sale, excluding those
matters set forth in section 33-438, subsection A.
The trustee may charge a fee not
to exceed one-twentieth of the amount the trustee may charge
pursuant to section 33-813 (six hundred dollars or
one-half of one per cent of the entire unpaid principal sum
secured, whichever is greater), or
a minimum of $20.00. The trustee is not liable for any
error or omission in providing the information requested.
A.R.S. Section 33-809(E)
provides that beginning at 9:00 a.m. and continuing until 5:00
p.m. on the last business day preceding the day of sale and
beginning at 9:00 a.m. and continuing until the time of sale
on the day of the sale, the trustee shall provide to any
person who requests of the actual bid or credit bid the
beneficiary is entitled to make at the sale. If the trustee is
unable to provide the credit bid during the prescribed time
period, the trustee shall postpone the sale until the trustee
is able to comply with this subsection. Again, the
trustee has no liability for the accuracy or completeness of
the information.
Making
bids at the Trustee Sales:
ARS
Section 33-810 (A). On the date and at the time and place designated in the
notice of sale, the trustee shall offer to sell the trust property at public
auction for cash to the highest bidder. The attorney or agent for the trustee
may conduct the sale and act at such sale as the auctioneer for the trustee. Any
person, including the trustee or beneficiary, may bid at the sale. Only the
beneficiary may make a credit bid in lieu of cash at sale. The trustee shall
require every bidder except the beneficiary to provide a one thousand dollar
deposit in cash or in any other form that is satisfactory to the trustee as a
condition of entering a bid. The trustee shall not refuse cash as a form of
payment of the bidder's deposit. Every bid shall be deemed an irrevocable offer
until the sale is completed, except that a subsequent bid by the same bidder for
a higher amount shall cancel that bidder's lower bid. The trustee shall
return deposits to all but the bidder or bidders whose bid or bids result in the
highest bid price.
Paying the Bid Amount:
ARS Section 33-811(A). The highest bidder at the sale,
other than the beneficiary to the extent of the credit bid,
shall pay the price bid by no later than 5:00 p.m. of the
following day, other than a Saturday or legal holiday. I
ARS
Section 33-810 (A) The sale shall be completed on
payment by the purchaser of the price bid in a form
satisfactory to the trustee. The subsequent execution,
delivery and recordation of the trustee's deed as prescribed
by section 33-811 are ministerial acts. If the trustee's deed
is recorded in the county in which the trust property is
located within fifteen business days after the date of the
sale, the trustee's sale is deemed perfected at the appointed
date and time of the trustee's sale.
ARS Section 33-811(B). The price bid shall be paid at the
office of the trustee or the trustee's agent, or any other
reasonable place designated by the trustee. The trustee shall
execute and deliver the trustee's deed to the purchaser within
seven business days after receipt of payment by the trustee or
the trustee's agent made in a form that is satisfactory to the
trustee.
What if the highest bidder at the sale fails to pay his bid amount?
ARS Section 33-811(A) If the highest bidder fails to
pay the amount bid for the property the trustee, in his or her
sole discretion, shall either continue the sale to reopen
bidding or immediately offer the trust property to the second
highest bidder who may purchase the trust property at that
bidder's bid price. The deposit of the highest bidder who
fails to pay the amount bid shall be forfeited and shall be
treated as additional sale proceeds. If the second highest
bidder does not pay that bidder's bid price by 5:00 p.m. of
the next working day then the trustee shall either continue
the sale to reopen bidding or offer the trust property to each
of the prior bidders on successive working days until a bid
price is paid. A highest bidder who fails to pay the amount
bid by that bidder is liable to any person who suffers loss or
expenses as a result, including attorney fees, plus that
bidder may be black-balled from any future trustee sales.
Postponement
of a Trustee Sale:
ARS
Section 33-810 (B) The person conducting the sale may
postpone or continue the sale from time to time or change the
place of the sale to any other location authorized by the law
by giving notice of the new date, time and place by public
declaration at the time and place last appointed for the sale.
Any postponement is limited to no more than ninety calendar
days at any one time. No written notice of the postponed,
continued or relocated sale is required.
What
if a Bankruptcy is filed before the Sale is Completed?
ARS
Section 33-810 (C). A sale
shall not be complete a bankruptcy has been filed prior to the
time of the trustee's sale. If a sale is held it shall
be deemed to be ineffective and is automatically postponed to
a date, time and place announced by the trustee at the sale.
If no automatic postponement date is called then it shall be
continued to the same place and at the same time twenty-eight
days later.
What is a
trustee's Deed?
ARS Section 33-811(E) provides that the trustee's deed
shall operate to convey to the purchaser the title, interest
and claim of the trustee, the trustor and the beneficiary.
ARS Section 33-811(B) provides that the trustee's deed
shall raise the presumption of compliance with the
requirements of the deed of trust and this chapter relating to
the exercise of the power of sale and the sale of the trust
property.
When Does the Investor Get the Trustee's Deed?
ARS Section 33-811(B) provides that a Trustee shall
execute and deliver the trustee's deed to the purchaser within
seven business days after receipt of payment by the trustee in
a form that is satisfactory to the trustee.
ARS
Section 33-810 (E) provides that the if the trustee's deed
is recorded in the county in which the trust property is
located within fifteen business days after the date of the
sale, the trustee's sale is deemed perfected at the appointed
date and time of the trustee's sale.
What happens after the sale if I still live in the
property?
If you cannot stop the sale by making up your payments or
filing for a Chapter 13 bankruptcy-- the lender can
proceed with the Trustee’s Sale as scheduled. Even after
the home is sold, you may still have some options.
Understand that the new owner has the right to refuse any
options at all.
1. Make arrangements to move. After
the Trustee’s Sale, the home belongs to the lender (if the
lender “bought it back”) or the person or company that bought
it at the sale. The new owner has a right to have you move
out so they can use the home.
2. Agree to
rent the home, if the new owner agrees. Sometimes the new
owner will agree to rent to you at least for a short time.
Usually you will need to have a written rental agreement and
be expected to pay rent. Be very careful about an
offer of a "lease back with purchase". The person leasing you
the property may only want to get a big down payment and then
terminate the lease agreement for some minor default. They
keep your money and you are still out of the house.
3. Agree in writing to leave by a certain
date without requiring the new owner to go to court to
evict you, if the new owner will agree to give you a little
more time to arrange to move. There is no legal requirement
that the owner do this.
4. Get ready to move when evicted.
Expect the new owner to give you a Notice to Vacate and then
file a Forcible Entry and Detainer action in court to have the
court order you to move out. This increases costs for the new
owner, who can ask that you be ordered to pay them, so it
costs you more if you don’t move on your own. If you receive
a notice about a court hearing, we recommend that you go to
court at the time set for the court hearing even if you
already have moved out. If possible, be sure that all of your
belongings are moved out before the court hearing or
at the very latest before the date that the judge orders that
the “writ will issue” (usually 5 days after the hearing). If
you have not moved by the date that the writ issues, the new
owner can have the constable or sheriff come to remove you on
that day and is not required to give you any more time
to move your belongings. This can make it difficult and cost
you more.
What are
Excess Sale Proceeds? Once the trustee's
sale has been completed there monies left over because
the lender who foreclosed has been paid in full.
These extra monies are called "excess sales proceeds". All junior
lienholders and the property owner at the time the
property was sold have a right to apply for those funds.
The Trustee conducting the Trustee's Sale will deposit
(in most cases) the funds with the County Treasurer or
Assessor, a complaint will be filed by the Trustee and
served on everyone listed on the title policy. At
that point the junior lienholders and/or the old
property owner can file an application with the Court.
There are notice requirements and most likely the court
will have a hearing on the distribution of any monies. See
Arizona Revised Statutes - 33-812. In order of
obtain the funds the applicant must have a signed,
certified copy of the final Order from the Court, $30.00 payable to the
Treasurer (of Assessor) and a
W-9.
BEWARE: There
are many vultures praying on those who have lost their
homes through a trustee's sale or foreclosure.
These vultures are running scams to take most, sometimes
all, of the equity which should be paid to the
homeowners. There is a lot of equity or "excess
sale proceeds" today - given the value of the houses in
the 2005-2006 market. The law
Arizona Revised Statutes - 33-812. specifically
limits what these vultures are permitted to do (charges,
etc), yet most are blatantly ignoring the law and
robbing the homeowners of thousands of dollars in
hard-earned equity in their home. For instance -
ARS 33-812 specifically limits the right to charge the
homeowner more than $2,500.00 for "recovery of or
assistance in the recovery of excess proceeds",
absent unusual circumstances that the judge must approve.
Yet, I have received numerous reports of changes in
excess of 50% of the entire amount - with no limit on
the maximum charges. Their actions evidence a
complete refusal to honor the limits set by law.
These folks are prohibited from obtaining a binding
contact for at least 30 days after the trustee's sale,
yet they are normally on the doorstep the day after the
sale.
The requirement to obtain
these excess sale proceeds is that you must actually
own the home on the date of the trustee's sale.
These vultures know this requirement and approach the
homeowner the day or two before the sale offering to buy
the home for a small amount. They completely fail
to tell the homeowner that there will most like be
several thousand dollars available after the sale is
complete, but that only the person who owns the home on the
day of the trustee's sale can request these funds.
What a travesty! One such example is: on or
about December 4, 2005 at 4:30 pm Roy Garrett approached one of my clients, indicating that
my client may have a right to $90,399.05 in equity after
his home had been sold in a trustee's sale. Mr.
Garrett's his business card indicates that he is a case
specialist with The Alliant Group, Equity Division.
The flyer my client received is from Reach for My Home,
Inc, a Non-Profit Organization, and includes Mr.
Garret's name and number as the only contact
information. I have both the original business
card and flyer. According to my client, Mr.
Garrett showed him a thick booklet from Reach for My
Home detailing how Reach could help my client. At
this time my client had lost
everything, his home, his business, and his dignity.
His only place to move was a trailer on his sister's
property. Garrett offered a "deal".
If my client signed a contract with them he would
receive approximately $40K in about 3-4 weeks, with no
guarantees. This would be 50 percent of the excess sale
proceeds, minus a large fee for the Alliant Group.
The trustee's sale had been conducted on November 16,
2005. Had my client agreed to these outrageous
terms he would have lost almost $50,0000.
What is the Arizona law on
these fees? Arizona Revised Statutes: 33-812(o) A
claimant may enter into an agreement with a third party
to pay for the recovery of or for assistance in the
recovery of excess proceeds on deposit with the county
treasurer. The agreement shall be in writing, signed by
the claimant, and the claimant's signature shall be
acknowledged by a notary public or other person
authorized to accept an acknowledgment pursuant to
section 33-511. Any agreement entered into before the
expiration of thirty days after the date the trustee's
sale was held, but not including the date of the sale,
is void and unenforceable. Any fee or payment provided
for in an agreement shall be reasonable. The fee or
payment shall be presumed to be unreasonable and the
obligation to pay the fee or payment is unenforceable if
the fee or payment agreed on exceeds two thousand five
hundred dollars excluding attorney fees and the costs of
filing the claim and providing the statutorily required
notices. Any person seeking a fee or payment exceeding
two thousand five hundred dollars may apply to the court
for additional compensation but the person has the
burden of establishing that the additional compensation
is reasonable under the circumstances. This subsection
does not preclude a claimant from contesting the
reasonableness of any fee or payment that is provided
for in an agreement for the recovery of or for
assistance in the recovery of excess proceeds.
According to the records of
the Arizona Corporation Commission: Reach
For My Home, Inc. alleged to be a "Non-Profit" organization,
is operated by Ingrid Joy Warrick. A quote
from Reach Form My Home's web site:
R.E.A.C.H. - Resources, Education and Counseling for
Homeowners, Incorporated is the only non-profit
organization in Arizona to offer FREE
foreclosure information.
The Alliant Group, Equity Division
and Reach For My Home operate out of the same building -
1530 N. Country Club Dr, Mesa, AZ 85201.
Alliant is owned and operated by Rick Rickert and Dennis
Reardon.
According to the State Bar of
Arizona Ms. Warrick graduated from the University of
Detroit Law School, and was admitted to practice law in
2004. According to the Maricopa County Superior
Court, since June of 2005 Ms. Warrick has filed
approximately 45 excess sale proceeds cases, with
Alliant taking an assignment in at least 17 of the
cases. The funds involved - more than $2.5
million dollars. A search of the Maricopa County
Recorder's office lists approximately 21 Irrevocable
Assignment of Full Interest in Excess Proceeds to The
Alliant Group. The Assignment states that the
original homeowner irrevocably gives up all their
interest in the proceeds to the Alliant Group.
For example: Case number CV
21006-004541 - one homeowner was entitled to $42,779.79,
but assigned all his rights to Alliant (recorded 2/24/06
at instrument 2006-0253595). The homeowner
allegedly agreed to accept only $16,250.00 out of the
$42,779.79. Ms. Warrick's Contract for Services
indicates that "It is further acknowledged that pursuant
to Arizona law, the excess proceeds may not be disbursed
for twelve (12) months or more." ARS Section
33-812 controls the time frame - there is no reference
to 12 months. Ms. Warrick filed the application
for the proceeds on April 21, 2006 and the order
approving the funds was signed on August 4, 2006.
According to this Contract for Services Ms. Warrick was
to receive $2,500.00, plus costs, plus $225 per hour for
"answering any objections, court appearances, etc".
Plus, the client agreed to pay a "third Party Provider"
an additional fee of $2,500.00 for "any services that
the Client may require prior to the release of any
excess proceeds".
The following is from the
Arizona Corporation Commission:
Shamrock Glen, LLC -
Articles of Publication: 6/8/05: Return Deliver to
Ingrid-Joy Warrick
Statutory Agent/Member:
Geraldine Crisman, 7575 E. Indian Bend, #1008,
Scottsdale, AZ 85250
Dennis J. Reardon,
Manager/Member, 11445 E. Via Linda, #2,315, Scottsdale,
AZ 85259
Black Shamrock
International, Inc. 11445 E. Via Linda Drive, Suite
2-315, Scottsdale, AZ 85235
Statutory Agency: Ingrid
Warriek (misspelled), 1530 N. Country Club Drive, Suite
2, Mesa, AZ 85201
Dennis J. Reardon
(CEO/Director), 11445 E. Via Linda Drive, Suite 2-315,
Scottsdale, AZ 85259
Tight Ship Rehab &
Renovations, Inc. c/o Law Office of Ingrid Warrick,
1530 N. Country Club Drive, Mesa, AZ, est. 4/23/04
Geraldine Crisman, Statutory
Agent/President/Director, c/o Law Office of Ingrid
Warrick, 1530 N. Country Club Drive, Mesa, 85201 (annual
report 1445 E. Via Linda, Ste 2-315, Scottsdale, 85259)
NOTE: Let me know if you are
contacted anyone involved in this type of
business. They may be legitimate, but do your
homework first. Never sign anything without first
understanding what you are signing and the full effect
of what you are signing. Never sign documents the
same day that you are offered the "deal". Take a
few days to mull over the value of the services offered.
Keep copies of every document that you sign, including
business cards, brochures and flyers. There may be
a much better deal out there, if you only look.
Many law firms, including this
one, assist people in applying for excess sale proceeds.
Our firm's normal fee for obtaining these proceeds
(including most court appearances and answering
objections) is usually $1,275, plus actual costs, if the
fees and costs are paid up front. If the client is
unable to pay the fees up front, then we may agree to
represent them, but our fees are usually $2,000, plus
actual costs; to be paid out of the proceeds. We
do not charge our clients referral fees, nor do we pay
any "finder's fees" or "third party provider fees" to
any company. No one in this firm holds interest in
another other company that "assists" people in obtaining
the excess proceeds. We would never advise a
client, nor request a client to sign an irrevocable
assignment of any proceeds. This firm is in the
business to practice law, not to invest in real
property. Diane L. Drain
