how difficult is it to foreclose if you are private first lender?

Asked by Ro, 85051 Fri May 20, 2011

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Leslie Byrne, Agent, Millsboro, DE
Thu May 26, 2011
So there is a loan second to yours? What is the nature of the second loan, construction? Are there any improvements left on the property? They subordinated to your loan? It is not difficult, but depending on the tenacity of the second guy and your borrowers, it could be a horrible headache. Many private lenders try to work with them beyond the 3 month limit until they truly give up and walk away without resistance. Did they put a lot of money down?
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Fred Shocklie, Agent, Peoria, AZ
Sat May 21, 2011
Here is a website with a wealth of information regarding real estate in Arizona. I have used this firm and the attorney is very competent. Just about any question you can think of is answered on this website. I have been fortunate in that I have not had to actually foreclose and have been successful in negotiating "cash for keys." I have used the services of this law firm and have been happy.

My firm works with investors and if there are any other questions we can help you with, please contact us.

Fred Shocklie
Owner and Real Estate Consultant
623-505-4585, ext 612
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Jeffrey Masi…, Agent, Scottsdale, AZ
Fri May 20, 2011
Dear Ro:

There are notices and redemption periods to deal with. The owners have rights that must be addressed. I recommend taking to a Real Estate attorney if you are looking to foreclose on a property where you are a lender. If you are a home owner facing a foreclosure, you will want to read the Short Sale Advisory published by the Arizona Department of Real Estate. This advisory addresses not just short sales, but foreclosures and deed in lieu of foreclosure.

Arizona is a "non deficiency" state where when using a purchase money mortgage a lender cannot pursue a borrower for the deficiency or "shorted" amount in a foreclosure or short sale.

For more on the advisory and more information:

Jeff Masich, Realtor
Arizona Homes and Land
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Jason Webb, Agent, Glendale, AZ
Fri May 20, 2011
I as the note holder have had to do this in the past a couple of times. Your trustee (attorney) handles most of the process. Not difficult, but does take some time. If the defaulting party has additional liens against the property, it makes it more difficult and takes more time. In one case where I had to foreclose, the defaulting party had an IRS tax lien against the property and it took an extra couple of months to get the lien removed as IRS alway has a senior position to any lenders. For more details, talk to one of the local trustees. There are only a handful in Arizona that do most of the foreclosures.

If you are considering doing an owner carry, talked to a real estate attorney first. Also make sure the borrow puts more than enough down to cover potential lost payments, legal expenses and damages to property.

If you have a borrower who has defaulted talk to the borrow to see if you can work something out quickly such as a Deed in Lieu. A title company can assist with preparing a Deed in Lieu. Don't let it slide, if you can work something out immediately go straight to an attorney to do the foreclosure.

In any case, seek legal advise. Could be very costly if you don't.
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Lucinda Tkach, , Phoenix, AZ
Fri May 20, 2011
I would reccomend legal advice!

If you need a referral feel free to contact me, I have several years experience in real estate.

Best of Luck!
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John Baldovin, Agent, Avondale, AZ
Fri May 20, 2011
It will depend on the type of contract and how the title is held. This is a question for an attorney. If you do not have one send me an e-mail and I will provide you several to talk to
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Carlos Ramir…, Agent, Mesa, AZ
Fri May 20, 2011
Very difficult, if you are not experienced. It will be better to hire an attorney for advice before getting into any contract like that.

Carlos J. Ramírez, PC, ABR, CNE
Associate Broker/Realtor, HomeSmart –
Certified Negotiation Expert (CNE)
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Sean Heideman, Agent, Phoenix, AZ
Fri May 20, 2011
Hi Ro,

You would have to hire a trustee to conduct the trustee sale on your behalf. Is your private mortgage note a deed of trust or contract for deed? If a deed of trust, the easiest way to get someone our of the house is to offer a deed in lieu of foreclosure where the borrower just quit claims the deed. You would need to give them an incentive to get them to do this but it might also work without the incentive. The borrower can also do a short sale where you would not have to take ownership of the property (if it does not sale at the auction). Also, always consult with an attorney with regards to this matter. Please let me know if you have any additional questions.


Sean Heideman, Realtor
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Gladys Viru…, Agent, Scarsdale, NY
Fri May 20, 2011
That sound like a legal question. Call me if you need a good RE attorney.
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