Deed of Trusts - Why lenders love Arizona

Lenders love Phoenix, Arizona (lenders also love California and Nevada). All states that have some of the highest foreclosure rates in the country.... But why ?? ....

Here is one important reason when it comes to Short Sale or Foreclosure that every buyer should know.

The concept, simplified, is what's called , Mortgage Theory vs. Deed of Trust Theory.

Most states, use traditional mortgages, which translated from its French origin literally means , "a promise upon death" or a "death pledge". (scary , huh ?)...

Keep in mind, I am not an attorney and there are variations, other rules and regulations that need to be understood, and interpreted on both of the above if you are preparing for a short sale or going through either of any type of foreclosure.

However, this is a boiled down version for a quick definition.

Mortgage theory is generally better for the borrower, worse for the lender, as it has to do with the Foreclosure process. When the borrower does not make timely mortgage payments, the lender invokes an ‘acceleration' clause and calls the note due. However, the borrower has options. Borrower can file for bankruptcy delaying the foreclosure proceedings or they can remain in the property and await a "Judical" foreclosure; a process where the lender files suit to foreclose on the lien and order the property sold. This is costly, takes time, and a lot of money to the lender (lost mortgage payment, court costs, etc.) Further, in this process, the borrower has 6 months to redeem the property from the mortgage foreclosure sale.

Areas like Phoenix and the whole State of Arizona practice what is called Deed of Trust theory.

(click for rest of article Deed of Trust theory explained ! )