According to Investopedia, a default is when a debt, such as a mortgage loan secured by a property, does not get the necessary interest or principal payments. Any failing that a contract requires could be considered a default. This may involve neglecting to make mortgage payments, maintain current insurance, pay other secured obligations, pay real estate taxes, or adhere to other specific contract clauses. Defaults subject borrowers to legal claims and may restrict their access to credit in the future.
Never allow a trustee’s sale, short sale, deed in lieu of foreclosure, or foreclosure proceed without first obtaining legal and tax advice.
Once the process is finished, most mistakes cannot be fixed. That means, you be locked into the consequences of your choices. How do you avoid this horrible situation? Don’t take any advice from a realtor, your neighbor, or an inexperienced lawyer. For instance, a sweet family from Africa, who barely speak English, followed the directions of their realtor, who told them to ignore a demand from the HOA. They have now lost their home and significant equity. We are helping get some excess sale proceeds, but no where near the equity they had in their home.
You should always make informed decisions because this is your life and your future. I don’t say this to scare you; rather, it’s because I’ve seen hundreds of people deal with disastrous consequences that could have been avoided if they had just sought expert legal and/or tax counsel.
Beware of home and land scams
Thousands of frauds are perpetrated on unwary homeowners. Because they are unable to seek legal guidance, many prey on a certain population, such as the low-income or minorities. The best advise anyone can give is to never respond to someone who contacts you in a crisis and offers to “assist” you. Always reach out to well-established companies with a track record of providing high-quality services.
Here is just one example of such greed – “Campos Gets Prison in Arizona Housing Scheme“.
Unless it is federal land, the law of the state where the property is located controls the processes governing judicial foreclosure, trustee sales, eviction or excess sale proceeds. In Arizona a trustee’s sale or judicial foreclosure are two of the processes a lender can use when there is a default of the original loan agreement (e.g. not paying the mortgage).