The phrase "anti-deficiency statute" is typically used to refer to the laws that protect residential borrowers from liability for any deficiency balance remaining after foreclosure. In Arizona, most residential loans are secured by deeds of trust rather than mortgages. The term “mortgage” is, however, commonly used to refer to the loan against a property. There are two anti-deficiency statutes in Arizona. Of the two, A.R.S. §§ 33-729(A) applies only to purchase money mortgages. While rare, Arizona case law has also applied this statute to judicial foreclosures on purchase money deeds of trust.* In laymen’s terms, this means that the statute applies only to loans used to purchase the property and does not apply to non-purchase money loans such as home equity lines of credit or “cash-out” refinance loans. The second anti-deficiency statute in Arizona, A.R.S. §§ 33-814(G) applies to deeds of trust foreclosed upon through a trustee sale. (Trustee sales are much more common in Arizona than judicial foreclosures.) This statute applies regardless of whether the deed of trust is purchase money or non-purchase money. However, most non-purchase money deeds of trust include a promissory note which may be used by the lender to file suit for the deficiency balance after a trustee sale. In laymen’s terms, this again means that borrowers of home equity lines of credit or “cash-out” refinance loans may still be held liable for the deficiency balance after a trustee sale. To determine how the Arizona anti-deficiency statutes apply to your particular loans and circumstances, please consult an attorney. *Mid Kansas Federal Savings & Loan Association v. Dynamic Development Corp., 167 Ariz. 122, 126, 804 P.2d 1310, 1314 (1991). |