Arizona Mortgage Lawyer: Resolving Mortgage Debt Issues
If you’re struggling with mortgage debt in Arizona, you may need a mortgage attorney. A mortgage lawyer is one whose practice is focused on mortgage debt and the various contracts and security instruments that accompany mortgages in Arizona.
The Difference Between a Mortgage and a Deed of Trust in Arizona
Technically speaking, Arizona is not really a “mortgage state”. We use a “deed of trust” to secure most real estate transactions in Arizona. The difference between a mortgage and a deed of trust is not obvious to most people. And, truth be told, the terms are used interchangeably, even by those in the mortgage industry. Here is the best way to explain the difference:
When a borrower buys a home, they sign two main documents. The first is called a promissory note, or just “note”. That is the loan documents in which the borrower agrees to pay the money back to the lender according to specific time periods, interest rates, etc.
The second document is the security for the loan, which in Arizona is typically a deed of trust. With a deed of trust, there are actually three parties to the document: the borrower, the lender and the trustee. The trustee holds title to the property until the borrower fully repays the loan. During that time, the deed of trust acts as a lien against the property. The borrower is technically listed as the owner of record for purposes of property taxes, HOA dues, etc.
If the borrower repays the loan in full, then a deed of release and reconveyance is recorded with the county recorder by the trustee. That reconveys the title to the borrower free and clear of the lien.
If the borrower does not repay the loan as agreed, the lender may initiate a trustee’s sale (most people refer to this as a foreclosure). In a trustee’s sale, the trustee is instructed by the lender to sell the property at auction to the highest bidder to satisfy the loan balance. The trustee’s sale process is non-judicial, which means that typically it does not involve the courts. It is a relatively quick process (90 days) that involves recording certain documents with the county recorder and holding an auction, among other things.
By contrast, if a mortgage is used instead of a deed of trust, there are a few key differences. A mortgage involves only two parties: the lender and the borrower. The mortgage secures the promissory note, or loan. The mortgage also gets recorded with the county recorder and acts as a lien against the property.
The main difference between a mortgage and a deed of trust comes into play when a borrower defaults on the loan. If the borrower defaults on the loan, the lender will initiate a foreclosure proceeding. Except, with mortgages it is a judicial process, which means the courts are involved. Essentially, the lender must sue the borrower and prove that it is entitled to foreclose on the property. Of course, as with any lawsuit, the borrower can present any defenses and if it is fully contested, there could be a trial.
As you can imagine, the mortgage foreclosure process can take much, much longer than the quicker 90 day trustee’s sale process. For that reason and others, most lenders prefer a deed of trust. And since Arizona law allows for this, deeds of trust are the most common security instrument for real estate in Arizona.
Negotiating and Resolving Mortgage Debt in Arizona with a Mortgage Attorney
If you have mortgage debt or need defense against your lender, it is critical to get an attorney who understands Arizona mortgage law and deed of trust issues.
We offer a free consultation to discuss your mortgage negotiation needs.