As a lender,
what
do I need to do in order to
start a Trustee's Sale?
A brief
synopsis of the trustee's sale process:
Foreclosures on the Rise (links to several articles
from Arizona Republic)
The
following is a brief synopsis of the trustee's sale process:
[1] A
Trustee's Sale Guaranty (TSG) Report is ordered from the title company.
This report will list parties that may have an interest in this property,
including all current liens, encumbrances and judgments.
[2] After
receipt of the TSG, all parties that have an interest, either in the original
Deed of Trust or have since its recording, have recorded an interest in the
Property will receive notice of the Trustee's sale.
This notice is to give ample warning to any parties that have an interest
junior to yours that they may lose that interest once the property is sold at
Trustee's Sale.
[3] The
Substitution of Trustee and Notice of Trustee's Sale is recorded in the County
Recorder's Office.
[4]
The property and courthouse are posted with a copy of the Notice of
Trustee's Sale and the same Notice is published for four consecutive weeks in a
newspaper of general circulation in the county in which the property is located.
[5] There
is continuing contact with the title company to ascertain whether or not the IRS
has filed a claim or lien, or whether the Trustor has filed a bankruptcy.
Should either of these happen, additional procedures become necessary.
If
a bankruptcy is filed at any time prior to the completion of the trustee's sale,
the sale must be postponed until the Bankruptcy Court's order is received
lifting the stay against any actions by any creditors of the Trustor.
Thus, should this become necessary, there will be additional fees for my
representation in Bankruptcy court.
[6] The
Beneficiary will be contacted approximately one week prior to the sale
and asked to prepare a credit bid. This
credit bid should include all principal, interest, monies expended to keep any
senior lienholder current, taxes, costs and penalties permitted by the Note or
Deed of Trust. To the beneficiary's
credit bid the trustee's and attorney's fees and costs will be added and
this amount is usually the opening bid at the time of sale. That is not
always the case. If you are seeking a deficiency then it is imperative
that you bid only the fair market value of the property, not the full debt.
Talk to your attorney regarding this matter.
[7]
It is necessary that the Beneficiary have their credit bid prepared and
submitted to the Trustee at least 3 working days before the time of the sale.
The Trustee has an obligation to provide that credit bid to anyone who asks no
later than 9:00 am the day before the sale.
Failure to provide the credit bid within that
period will require
that the trustee's sale be postponed.
A.R.S. Section 33-809(F)
THE
SALE: If there are any bidders present, they will be asked to sign in with their
name, phone number and address. Each
bidder must provide the trustee with a $10,000 deposit (cashier's check payable
to Law Office of D.L. Drain, PA). All $10,000 deposits will be returned to
all bidders at the time of the trustee's sale, with the exception of the
successful bidder. The
successful bidder must tender to this office, by 5:00 p.m. the day following the
date of sale, cash or certified funds for the amount of their bid.
If no bidders are present, the Beneficiary will take the property for the
amount of the credit bid and the Trustee will then issue a Trustee's Deed naming
the Beneficiary as owner of the property.
Please
keep in mind that the bidder at the sale takes the Property subject to any liens
that had priority above the Deed of Trust that was foreclosed. Please make sure during the period of the foreclosure that
all senior lienholder are kept current, otherwise they will foreclose on their
Deed of Trust and eliminate a junior's interest in the property. Talk to
your attorney about this situation.
[8] If,
at any time, during the sale process the Trustor requests the amount necessary
to reinstate the loan, the Trustee must provide him with this information.
This reinstatement figure will be comprised of the amount necessary to
bring the account current, all permitted penalties, costs, interest, taxes,
insurance and monies paid to keep any senior liens current.
To
the Beneficiary's reinstatement quote the Trustee will add all fees and costs,
as permitted by the Arizona Revised Statutes, and forward the total to the
Trustor. The permitted trustee fees
may be lower than those quoted to the Beneficiary for the processing of the sale
if the current unpaid principal is less than $110,000.00.
Upon
receipt of the reinstatement, the Trustee will record a cancellation of
Trustee's Notice of Sale which will effectively terminate the sale. The Trustor has the right to reinstate his loan at any time
prior to the date of sale, assuming that all fees permitted by the Statutes are
paid at the time of reinstatement. Should
he default again, we can begin the sale process over as many times as necessary.
[9] The
Beneficiary has the right to request that the Trustee postpone or cancel the
sale at any time prior to the trustee's sale.
Please keep the Trustee informed should you decide to do so, otherwise
the sale will continue as scheduled.
The
Arizona Revised Statutes require that the Beneficiary notify
the Trustee, in
writing, should the property be reinstated, paid off, or other agreement reached
regarding the cancellation of the sale. Failure of the Beneficiary to do this could amount to a
costly penalty to the Beneficiary, both in time money.
