Hello and thank you for allowing me to address your legal question.
Arizona does not allow “deficiency judgments” (i.e. a judgment for the difference between the selling price of a house and the amount owed under the loan) in certain circumstances. Below are the pertinent parts of the two anti-deficiency statutes (located HERE and HERE):
33-814. Action to recover balance after sale or foreclosure on property under trust deed
G. If trust property of two and one-half acres or less which is limited to and utilized for either a single one-family or a single two-family dwelling is sold pursuant to the trustee's power of sale, no action may be maintained to recover any difference between the amount obtained by sale and the amount of the indebtedness and any interest, costs and expenses.
33-729. Purchase money mortgage; limitation on liability
A. Except as provided in subsection B, if a mortgage is given to secure the payment of the balance of the purchase price, or to secure a loan to pay all or part of the purchase price, of a parcel of real property of two and one-half acres or less which is limited to and utilized for either a single one-family or single two-family dwelling, the lien of judgment in an action to foreclose such mortgage shall not extend to any other property of the judgment debtor, nor may general execution be issued against the judgment debtor to enforce such judgment, and if the proceeds of the mortgaged real property sold under special execution are insufficient to satisfy the judgment, the judgment may not otherwise be satisfied out of other property of the judgment debtor, notwithstanding any agreement to the contrary.
So, if you have a deed of trust and the trustee sells the property, you don’t owe any deficiency. If you have a purchase money mortgage (i.e. not a home equity loan) and the mortgagee forecloses, then you don’t owe any deficiency. Of course, I’m also assuming that the property is single family and under 2.5 acres.
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