September 30th, 2010
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Various sources have reported that JP Morgan Chase has temporarily halted foreclosures because of potentially flawed paperwork. One issue that has arisen is reports that the people responsible for reviewing the loan documents failed to do so, such that they were actually unable to truthfully verify that the loans were in default and the amount of the default. Chase’s stay on foreclosures follows GMAC’s halting of certain foreclosures and evictions in 23 states last week based on procedural problems in its paperwork.
According to reports, the stoppages are just temporary and will not significantly affect the overall number of foreclosures.
The Federal government has two programs to help the unemployed avoid foreclosure.
Through the Housing Finance Agency (HFA) Innovation Fund for the Hardest Hit Housing Markets (the Hardest Hit Fund), there $2 billion of assistance that will be made available to those having difficulty making their loan payments due to unemployment. This fund will be distributed to states that have been hardest hit by the downturn in the economy. Alabama will receive over $60 million. Arizona is not on the list published by the government.
The U.S. Department of Housing and Urban Development (HUD) is in the process of launching another program whereby $1 billion in assistance will be provided through the Emergency Homeowners Loan Program. That loan program will provide interim assistance for not more than 24 months to people who are or may face foreclosure due to unemployment, underemployment or medical problems.
Get more information about the foreclosure assistance programs.
The Arizona Court of Appeals recently decided a case where a deed of trust was mistakenly initially recorded without a legal description. In 3502 Lending, LLC v. CTC Real Estate Service, the borrower executed a deed of trust with the legal description attached as an exhibit, but the deed of trust was initially recorded without the exhibit. As between the parties to the deed of trust, the Court held that the deed was valid since it included the legal description when it was signed.
The Court next considered whether the deed of trust was superior to a later recorded deed of trust, even though the first deed of trust was recorded without the legal description. The Court held that it was, notwithstanding the initial defect in the first deed of trust, since the party holding the second deed of trust had received actual notice that there was a prior/superior deed of trust against the property.
This case reinforces the law that the recording system is for the benefit and protection of non-parties to the transaction and parties who do not have actual notice of a prior recording.
Interested in learning more about Arizona’s Anti-Deficiency Statutes? Watch our video presentation. The video covers basic terminology, concepts and the application of Arizona’s Anti-Deficiency Statutes to trustee’s sales (non-judicial foreclosures) and judicial foreclosures.
