I recently sent out a link to an article that appeared on MSNBC.com about a legal procedure that has allowed some people to force banks that are trying to foreclose on them to back off. A high percentage of loans have been bundled and sold on the secondary market, making the original documentation hard to find. By obliging the banks to produce the loan documents in a court of law, some judges have ruled in favor of the borrowers. However, this only works in some states.

Two Arizona attorneys who received the link to the article were quick to point out to me that this does not work in the state of Arizona. Here’s what one attorney wrote: “This strategy probably will have little utility in Arizona because most foreclosures are non-judicial and production of the note as a trial exhibit occurs only in judicial foreclosures.” In Arizona, it all hinges around a Deed of Trust: “The required documentation for Arizona foreclosures by Trustee Sale is already recorded, in most cases.”

What about filing a court action to seek an injunction to stop the Deed of Trust sale? Forget it. “This can be an expensive proposition not likely to succeed without already having additional evidence questioning the lender’s right to proceed.”

So there you have it. In judicial foreclosure states (not Arizona, generally speaking), the lender files the foreclosure action in court, and the homeowner can use the rules of procedure (such as requiring documents to be produced) to delay or defend against the action. Most Tempe homeowners facing Trustee Sale foreclosure proceedings don’t have these built-in procedural rules available for them to work with.

This well intentioned experience has provided a reminder to all of us involved in Tempe Real Estate transactions to make sure we get our legal and tax information from qualified professionals.

If you have further questions regarding Tempe foreclosures please contact one of my two legal watchdogs.