Question: Two years ago, I let my brother and his family stay in my house in Cottonwood. Instead of paying rent, my brother agreed to make the mortgage payments. Although I knew he was having trouble recently making some of the payments, my brother kept promising me he would bring the mortgage current. He called last week, however, to say that he just found out that there had been a foreclosure of the house by trustee’s sale, and that the mortgage company now owned the house. If this trustee’s sale is valid, I have lost at least $75,000 of equity. Didn’t the mortgage company have an obligation to notify me about the sale because I was the borrower and the owner of record?
Answer: You are correct. Although you have used the term “mortgage,” your loan for the Cottonwood house was probably secured not by a mortgage but by a deed of trust. In Arizona a deed of trust, not a mortgage, is generally the document used for a security interest in real property. A deed of trust can be foreclosed by a trustee’s sale without any court action. The only requirement for notice to the homeowner of a trustee’s sale is mailing the recorded notice of trustee’s sale by certified or registered mail to the borrower’s address on the deed of trust, or to the borrower’s last known address. In your situation the notice of the trustee’s sale was probably mailed to the house in Cottonwood and was either returned undeliverable or was ignored by your brother.