Full question:
How can I stop a non-judicial foreclosure in a case where the lender cannot produce a complete copy of the Note? A Trustee's sale date has been set and I have a loan modification in process. How can I stop the non-judicial foreclosure or at least delay the sale date until the loan modification is processed? The property is in Arizona.
- Category: Real Property
- Subcategory: Foreclosure
- Date:
- State: Arizona
Answer:
During the past decade, mortgages were sold and resold, bundled into securities and sold to investors. In many cases, the original note signed by the homeowner was lost, stored away in a distant warehouse or destroyed. Persuading a judge to compel production of hard-to-find or nonexistent documents can, at the very least, delay foreclosure, buying the homeowner some time and increasing the pressure on the lender to renegotiate the mortgage. The original note is almost always electronically retained and can eventually be found.
Judges are often willing to accept electronic documentation. Lenders are sometimes allowed to produce other paperwork to establish they are the holder of a loan. There have been cases where the foreclosure action was thrown out because of a failure to produce the note, but it will be a matter of subjective determination for the court to decide if the foreclosure may proceed.
Most foreclosures in Arizona are judicial foreclosures. In a non-judicial foreclosure, if you wish to contest the foreclosure, you will have to file a lawsuit yourself. When you do this, you ask the court to temporarily stop the foreclosure so that you can resolve the legal issues in court. Once you are in court, you can raise the same defenses you would have raised in a judicial foreclosure proceeding.
In these lawsuits, the debtor typically asks the court for three things, in the following order:
-a temporary restraining order (which lasts for a certain number of days, typically under 2 weeks)
-a preliminary injunction (will last until the court decides the case), and
-a permanent injunction (which will be granted if you win your case).
Lack of funds and inability to pay is not considered a valid defense. A valid defense may include such excuses as identifying the incorrect borrowing party to the loan contract, or having made all payments on time, among others. The answer is an opportunity to show why the property shouldn't be foreclosed upon.
This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.
