When you fall behind on mortgage payments, your lender has the legal right to initiate foreclosure proceedings to recover the debt. However, homeowners in Arizona have rights and potential defenses that can help protect their homes. These key defenses may provide valuable insights if you decide to challenge the foreclosure process.

Mortgage Servicing Errors

One common defense to foreclosure in Arizona is to challenge the foreclosure on the basis of mortgage servicing errors. Mortgage servicers are responsible for:

• Handling your loan account
• Processing payments
• Managing escrow accounts
• Providing accurate information about your mortgage.

Therefore, errors made by mortgage servicers can have serious consequences and may be a valid defense in a foreclosure action.

If you believe your mortgage servicer has made errors that have contributed to your foreclosure situation, you can take the following steps:

1. Gather evidence of these errors.
2. Keep detailed records of your communications with the servicer.
3. Collect payment receipts.
4. Take note of any discrepancies you have noticed.
5. Request your loan account history to identify any inaccuracies or discrepancies.

Violations of the Arizona Foreclosure Process

Arizona has specific laws governing the foreclosure process, and violations of these laws can be used as defenses to foreclosure. Some common violations to watch out for include:

• Notice Requirements: Arizona law requires lenders to provide certain notices to borrowers before initiating foreclosure. These notices must be sent according to specific timelines and requirements. If the lender fails to comply with these notice requirements, it could be a basis for challenging the foreclosure.
• Dual Tracking: Dual tracking occurs when a lender continues foreclosure proceedings while simultaneously considering a homeowner’s application for a loan modification or other foreclosure alternatives. Arizona law prohibits dual tracking, and if you can prove that your lender engaged in this practice, it may be a defense to foreclosure.
• Robo-Signing: Robo-signing is the practice of approving foreclosure documents without proper review and verification. In some cases, this can lead to inaccuracies or fraudulent foreclosure filings. If you suspect robo-signing in your case, it’s crucial to investigate and gather evidence to challenge the foreclosure.

Loan Modification and Loss Mitigation

Homeowners facing foreclosure in Arizona should explore options for loan modification and loss mitigation. Lenders are often willing to work with borrowers to find alternative solutions that allow them to keep their homes. These solutions may include:

• Loan modifications
• Forbearance agreements
• Repayment plans

It is a must to communicate with your lender early in the process. Provide all necessary financial documentation to support your request for a loan modification or other loss mitigation options. Many government programs, such as the Home Affordable Modification Program (HAMP), are designed to help struggling homeowners.

Bankruptcy as a Defense

Bankruptcy can be a powerful tool to halt foreclosure proceedings temporarily and provide a fresh start for homeowners in financial distress. Filing for bankruptcy triggers an automatic stay. It prohibits creditors, including mortgage lenders, from pursuing foreclosure actions during the bankruptcy process.

Chapter 13 bankruptcy, in particular:

• Allows homeowners to create a repayment plan that can include past-due mortgage payments.
• Gives homeowners an opportunity to catch up on arrears while keeping the home.

However, bankruptcy is a complex legal process with long-term financial implications. So, it’s essential to consult with an experienced bankruptcy attorney before taking this step.

Homeowners have options and legal protections to keep their property. Among the options available to homeowners are loan modifications, violations of foreclosure rules, faults in mortgage servicing, and bankruptcy. A knowledgeable foreclosure attorney can walk you through the procedure. He/she can help you assess which defenses to foreclosure apply to your particular situation.