Foreclosure is the legal process effected through the court system in which a mortgagee (lender—often a bank) terminates a mortgagor’s (borrower’s) interest in the real property in which the mortgagor gave the mortgagee a security interest (a lien) as collateral for the loan used to purchase the property.

Foreclosure generally occurs when a homeowner defaults and fails to make mortgage payments as required by the loan agreement (promissory note).

Foreclosure allows the lender to seize the property, remove the homeowner, and sell the home—all of which are legal remedies the mortgagor and mortgagee agreed to in the mortgage contract.

In Arizona, foreclosure is a legal process that allows a lender to terminate a borrower's interest in a property due to default on mortgage payments. Arizona law permits both judicial and non-judicial foreclosures. In a judicial foreclosure, the lender must file a lawsuit and obtain a court order to foreclose on the property. This process is used when there is no power of sale clause in the mortgage agreement. Non-judicial foreclosure, on the other hand, is more common in Arizona and can be used when the mortgage contains a power of sale clause. This allows the lender to sell the property without court intervention after providing notice and waiting a specified period. The borrower is typically given a chance to stop the foreclosure by paying the overdue amounts, plus fees and costs, before the sale. If the foreclosure proceeds, the property is sold, often at a public auction, and the proceeds go towards repaying the debt. If the sale amount is insufficient to cover the mortgage debt, the lender may be able to seek a deficiency judgment against the borrower for the remaining amount, depending on the circumstances and type of loan.