FAQ - QUALIFYING LOANS FOR NON-DEFICIENCY PROTECTION - FORECLOSURE IN ARIZONA
QUALIFYING LOANS FOR NON-DEFICIENCY PROTECTION:
QUESTION: What loans qualify for non-deficiency treatment?
ANSWER: Arizona law has two "anti-deficiency" statutes that will often apply to loans secured by single residential real estate and whether or not the home is occupied by the borrower. Where these statutes apply, a lender's remedy will be ONLY a foreclosure, with NO RIGHT TO SUE FOR MONEY beyond the amount received from the foreclosure sale. These two "safe harbors" are as follows:
One applies to mortgages, which must be foreclosed judicially, or deeds of trust if foreclosed judicially (that means by the creditor suing the debtor in a court). It is A.R.S. ' 33-729(A). It limits the claim to the proceeds of a sale of the property.
The other "anti-deficiency" statute applies only to deeds of trust when foreclosed via a trustee sale (through a suit in the court). It is A.R.S. ' 33-814(G). Same rule: The creditor only gets the amount from the sale of the property and no more.